Heidrick & Struggles International Annual Report 2019

FY2019 Annual Report · Heidrick & Struggles International

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Heidrick & Struggles 2019 Annual Report

innovate

++ transform

Heidrick & Struggles 2019 Annual Report

FELLOW STOCKHOLDERS:

Disruption is the new normal and radically transforming the
business landscape across every sector and industry. At Heidrick
& Struggles, we are not immune to disruption and are in the midst
of our own transformation. We were the pioneers of executive
search when our ﬁ rm was founded back in 1953, and today, while
we continue to innovate and build for the future, we have already
established a completely digital search platform. Our clients
are also accelerating the pace of innovation and change at their
companies, and we are right there with them as their trusted
leadership advisors, helping them understand what leaders
and organizations need to do to succeed in this type of disruptive
operating environment. Importantly, we continue to be driven
by our purpose – to help our clients change the world, one
leadership team at a time.

2019 marked a solid year for Heidrick & Struggles as we
successfully navigated market volatility and ended the year within
one percent of the previous year’s record net revenue results.
Our full-year adjusted earnings surpassed a very strong 2018, as
our continued focus on operational effi ciencies allowed us to deliver
consistent adjusted operating margin on slightly lower revenue.
Cross-collaboration between Executive Search and Heidrick
Consulting also continued to generate synergies as evidenced by
Heidrick Consulting’s sequential net revenue growth. During the
third quarter of 2019, we successfully acquired 2Get in Brazil, which
expands our growth platform throughout Latin America, where
we see compelling opportunities for both Executive Search and
Heidrick Consulting. We are particularly excited about innovative
and transformational projects we are leading both internally and
with our clients in exciting areas, such as digital transformation,
sustainability and diversity & inclusion.

Key to achieving these ﬁ nancial results is our steadfast focus
on increasing the scale and impact of our two businesses and
creating a premium, data-driven, tech-enabled service experience
for our clients, while maintaining a focus on our cost structure.
Our data diff erentiates us from our competitors and serves
as the foundation for all of our off erings in Executive Search and
Heidrick Consulting. In our Executive Search business, we have
a standardized process for capturing and analyzing data through
our proprietary Inﬁ nity Framework™, enabling us to make unique,
IP-backed recommendations that help our clients make the
most informed hiring decisions. Critically, we are delivering these
insights through Heidrick Connect, a digital portal, which gives
our clients access to review their engagements anywhere, at
any time. Also, in our Heidrick Consulting business, we deploy
a wide range of assessments, which provide us with data
and insights into the most eff ective attributes and behaviors of
eff ective leaders, teams and organizations.

In early 2019, we launched Goliath’s Revenge: How Established
Companies Turn the Tables on Digital Disruptors, which examines
how established companies can use their incumbent advantages
to reinvent themselves and get ahead of disruption. Today, leaders
want to understand how to make their teams more agile and

embed a mindset of continuous innovation in the DNA and culture
of their workplace. These are areas we have studied extensively,
and last year we also introduced our clients to Heidrick Consulting’s
Digital Acceleration & Innovation capabilities that help leaders
and companies accelerate performance, while keeping the human
elements of leadership development, organizational eff ectiveness,
and culture shaping front and center within the context of a
company’s digital transformation. With these new off erings, we
worked closely with our clients to help them understand how
emerging technologies are aff ecting their people, culture, training,
governance and leadership agendas.

I am very proud of all that our team accomplished in 2019. As we
look ahead in 2020, while there is a signiﬁ cant level of uncertainty
associated with the COVID-19 pandemic, our ﬁ rm is in a strong
position both strategically and ﬁ nancially. As we continue to work
closely with our clients through these unprecedented times, we
remain optimistic and believe that the types of transformational
projects we are working on will continue to be strong business
imperatives for our clients. We continue to partner with our clients
on new, emerging opportunities across the increasingly complex
and fast-changing business landscape, and through our C-suite
focus, we are playing a pivotal role in shaping our clients’ future.

Importantly, our ﬁ nancial strength gives us ample opportunity to
prudently invest in growth, innovation and diff erentiation. In 2020,
we intend to use our market position and strong cash ﬂ ow to make
additional disciplined investments in our product teams, provide
new innovative off erings and broaden our capabilities to support
the foundational changes our clients seek to implement. We
continue to take a long-term approach to our business, and believe
that investing in innovation and growth is directly correlated with
the ultimate creation of shareholder value.

In summary, we are excited by our clients’ continued desire for
Heidrick & Struggles’ talent, leadership and culture solutions.
They are seeking more insights on leadership and talent trends
connected to their business strategies, are eager to receive more
creative and agile solutions for today’s increasingly complex and
fast-changing landscape – and they need to strike the right balance
between strengthening their core business while embracing
disruptive change.

Heidrick & Struggles is in a position of strength to meet these
needs, and we look forward to the year ahead. Again, thank
you to all of our colleagues around the world for their hard work
this past year.

Sincerely,
Sincerely,

Krishnan Rajagopalan
President and Chief Executive Offi cer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-25837

HEIDRICK & STRUGGLES INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

36-2681268
(I.R.S. Employer
Identification Number)

233 South Wacker Drive, Suite 4900, Chicago, Illinois 60606-6303
(Address of principal executive offices) (Zip Code)
(312) 496-1200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Common Stock, $0.01 par value

Trading Symbol

Name of Each Exchange On Which Registered

HSII

Nasdaq Stock Market LLC
(Nasdaq Global Stock Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company," and "emerging growth company" in Rule 12b-2 of
the Exchange Act.

Large accelerated filer
Non-Accelerated filer

Emerging growth company

Accelerated filer
Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

The aggregate market value of the registrant’s Common Stock held by non-affiliates (excludes shares held by executive officers, directors and beneficial owners
of 10% or more of the registrant’s outstanding Common Stock) on June 28, 2019 was approximately $484,944,428 based upon the closing market price of $29.97
on that date of a share of Common Stock as reported on the Nasdaq Global Stock Market. As of February 21, 2020, there were 19,170,352 shares of the registrant's
Common Stock outstanding.

Portions of the registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on May 28, 2020, are incorporated by reference

into Part III of this Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4. Mine Safety Disclosures

PART I

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities

Item 6.

Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Item 15. Exhibits, Financial Statement Schedules

Signatures

PART IV

PAGE

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ITEM 1. BUSINESS

Overview

PART I

Heidrick & Struggles International, Inc. (“Heidrick & Struggles”) is a leadership advisory firm providing executive search
and consulting services to businesses and business leaders worldwide. When we use the terms “Heidrick & Struggles,” “the
Company,” “we,” “us” and “our,” in this Form 10-K, we mean Heidrick & Struggles International, Inc. a Delaware corporation,
and its consolidated subsidiaries. We provide our services to a broad range of clients through the expertise of over 450 consultants
located in major cities around the world. Heidrick & Struggles and its predecessors have been a leadership advisor for more than
60 years. Heidrick & Struggles was formed as a Delaware corporation in 1999 when two of our predecessors merged to form
Heidrick & Struggles.

Our service offerings include the following:

Executive Search. We partner with respected organizations globally to build and sustain the best leadership teams in the world,
with a specialized focus on the placement of top-level senior executives. We believe focusing on top-level senior executives
provides the opportunity for several competitive advantages including access to and influence with key decision makers, increased
potential for recurring search and consulting engagements, higher fees per search, enhanced brand visibility, and a leveraged global
footprint. Working at the top of client organizations also facilitates the attraction and retention of high-caliber consultants who
desire to serve top industry executives and their leadership needs. Our executive search services derive revenue through the fees
generated for each search engagement, which generally are based on the annual compensation for the placed executive. We provide
our executive search services primarily on a retained basis, recruiting senior executives whose first-year base salary and bonus
averaged approximately $396,000 in 2019 on a worldwide basis.

The executive search industry is highly fragmented, consisting of several thousand executive search firms worldwide.
Executive search firms are generally separated into two broad categories: retained search and contingency search. Retained
executive search firms fulfill their clients’ senior leadership needs by identifying potentially qualified candidates and assisting
clients in evaluating and assessing these candidates. Retained executive search firms generally are compensated for their services
regardless of whether the client employs a candidate identified by the search firm and are generally retained on an exclusive basis.
Typically, retained executive search firms are paid a retainer for their services equal to approximately one-third of the estimated
first year compensation for the position to be filled. In addition, if the actual compensation of a placed candidate exceeds the
estimated compensation, executive search firms often are authorized to bill the client for one-third of the excess. In contrast,
contingency search firms are compensated only upon successfully placing a recommended candidate.

We are a retained executive search firm. Our search process typically consists of the following steps:

• Analyzing the client’s business needs in order to understand its organizational structure, relationships and culture, advising
the client as to the required set of skills and experiences for the position, and identifying with the client the other
characteristics desired of the successful candidate;

•

Selecting, contacting, interviewing and evaluating candidates on the basis of experience and potential cultural fit with
the client organization;

Presenting confidential written reports on the candidates who potentially fit the position specification;

Scheduling a mutually convenient meeting between the client and each candidate;

• Completing reference checks on the final candidate selected by the client; and

• Assisting the client in structuring compensation packages and supporting the successful candidate’s integration into the

client team.

Heidrick Consulting. In 2018, we combined our Leadership Consulting and Culture Shaping businesses to create Heidrick
Consulting, a comprehensive offering of the firm's leadership advisory services. Our consulting services include leadership
assessment and development, executive coaching and on-boarding, succession planning, team and board effectiveness,
organizational performance acceleration, workforce planning and culture shaping. Our consulting services generate revenue

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primarily through the professional fees generated for each engagement which are generally based on the size of the project and
scope of services. Heidrick Consulting represented less than 10% of our net revenue in 2019.

Client Base

For many of our clients, our global access to and knowledge of regional and functional markets and candidate talent is an

important differentiator of our business. Our clients generally fall into one of the following categories:

•

Fortune 1000 companies;

• Major U.S. and non-U.S. companies;

• Middle market and emerging growth companies;

• Governmental, higher education and not-for-profit organizations; and

• Other leading private and public entities.

Available Information

We maintain an Internet website at http://www.heidrick.com. We make available free of charge through the investor relations
section of our website annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934
("Exchange Act"), as well as proxy statements, as soon as reasonably practicable after we electronically file such material with,
or furnish it to, the U.S. Securities and Exchange Commission (“SEC”). Also posted on our website, and available in print upon
request of any shareholder to our Investor Relations Officer, are our certificate of incorporation and by-laws, charters for our Audit
and Finance Committee, Human Resources and Compensation Committee and Nominating and Board Governance Committee,
our Policy Regarding Director Independence Determinations, our Policy on Reporting of Concerns Regarding Accounting and
Other Matters, our Corporate Governance Guidelines and our Code of Business Conduct and Ethics governing our directors,
officers and employees. Within the time period required by the SEC, we will post on our website any amendment to the Code of
Business Conduct and Ethics and any waiver applicable to any executive officer, director or senior financial officer.

In addition, our website includes information concerning purchases and sales of our equity securities by our executive officers
and directors, as well as disclosure relating to certain non-GAAP financial measures (as defined in the SEC’s Regulation G) that
we may make public orally, telephonically, by webcast, by broadcast or by similar means from time to time.

Our Investor Relations Officer can be contacted at Heidrick & Struggles International, Inc., 233 South Wacker Drive, Suite

4900, Chicago, Illinois, 60606, Attn: Investor Relations Officer, telephone: 312-496-1200,
e-mail: InvestorRelations@heidrick.com.

Organization

Our organizational structure, which is arranged by geography, service offering and industry and functional practices, is designed
to enable us to better understand our clients’ cultures, operations, business strategies, industries and regional markets for leadership
talent.

Geographic Structure. We provide senior-level executive search and consulting services to our clients worldwide through a
network of 54 offices in 28 countries. Each office size varies; however, major locations are staffed with consultants, research
associates, administrative assistants and other support staff. Administrative functions are centralized where possible, although
certain support and research functions are situated regionally because of variations in local requirements. We face risks associated
with managing global operations, social and political instability, legal and regulatory requirements, potential adverse tax
consequences and currency fluctuations in our international operations. For a more complete description of the risks associated
with our business see the Section in this Form 10-K entitled “Item 1A - Risk Factors”.

In addition to our wholly owned subsidiaries, our worldwide network includes affiliate relationships in Finland, South Africa
and Turkey. We have no financial investment in these affiliates but receive licensing fees from them for the use of our name and
our databases. Licensing fees are less than 1% of our net revenue.

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Segment Information. We operate our Executive Search services in three geographic regions, each of which is reported as a
separate reporting segment: the Americas (which includes the countries in North and South America); Europe (which includes the
continents of Europe and Africa); and Asia Pacific (which includes Asia and the region generally known as the Middle East). Our
Heidrick Consulting reporting segment operates globally.

Americas Executive Search. As of December 31, 2019, we had 200 consultants in our Americas segment. The largest offices

in this segment, as defined by net revenue, are located in New York, Chicago, and Boston.

Europe Executive Search. As of December 31, 2019, we had 107 consultants in our Europe segment. The largest countries in

this segment, as defined by net revenue, are the United Kingdom, France, and Germany.

Asia Pacific Executive Search. As of December 31, 2019, we had 73 consultants in our Asia Pacific segment. The largest

countries in this segment, as defined by net revenue, are China (including Hong Kong), Australia, and Dubai.

Heidrick Consulting. As of December 31, 2019, we had 71 consultants in our Heidrick Consulting segment. The largest

countries in this segment, as defined by net revenue, are the United States, the United Kingdom, and Dubai.

The relative percentages of net revenue attributable to each segment were as follows:

Executive Search

Americas
Europe
Asia Pacific

Heidrick Consulting

Year Ended December 31,

2019

2018

2017

58%
19%
14%
9%

57%
20%
14%
9%

55%
20%
14%
11%

For financial information relating to each segment, see Note 18, Segment Information, in the Notes to Consolidated Financial

Statements.

Global Industry Practices. Our executive search and consulting businesses operate in six broad industry practices listed below.

These industry practices and their relative sizes, as measured by billings for 2019, 2018 and 2017, are as follows:

Global Industry Practices
Financial Services
Industrial
Global Technology & Services
Consumer Markets
Healthcare & Life Sciences
Education, Non-Profit & Social Enterprise

Percentage of Billings

2019

2018

2017

26%
21
21
17
12
3
100%

28%
21
20
16
11
4
100%

27%
18
22
17
12
4
100%

Within each broad industry practice are a number of industry sub-sectors. Consultants often specialize in one or more sub-
sectors to provide clients with market intelligence and candidate knowledge specific to their industry. For example, within the
Financial Services sector, our business is diversified amongst a number of industry sub-sectors including Asset & Wealth
Management, Consumer & Commercial Finance, Commodities, Corporate and Transaction Banking, Global Markets, Hedge Fund,
Infrastructure, Investment Banking, Insurance, Private Equity Investment Professionals and Real Estate.

We service our clients with global industry interests and needs through unified global executive search teams who specialize
in industry practices. This go-to-market strategy allows us to leverage our global diversity and market intelligence and is designed
to provide better client service. Each client is served by one global account team, which we believe is a key differentiator from
our competition.

Global Functional Practices. Our Executive Search consultants also specialize in searches for specific “C-level” functional

positions, which are roles that generally report directly to the chief executive officer.

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Our Global Functional Practices include Chief Executive Officer & Board of Directors; Human Resources Officers, Financial
Officers; Information and Technology Officers, Legal, Risk, Compliance & Government Affairs, Marketing, Sales and Strategy
Officers and Supply Chain and Operations.

Our team of Executive Search consultants may service clients from any one of our offices around the world. For example, an
executive search for a chief financial officer of an industrial company located in the United Kingdom may involve an executive
search consultant in the United Kingdom with an existing relationship with the client, another executive search consultant in the
United States with expertise in our Industrial practice and a third executive search consultant with expertise in recruiting chief
financial officers. This same industrial client may also engage us to perform skill-based assessments for each of its senior managers,
which could require the expertise of one of our leadership advisory consultants trained in this service.

Seasonality

There is no discernible seasonality in our business, although as a percentage of total annual net revenue, the first quarter
typically generates less revenue than the other three quarters. Revenue and operating income have historically varied by quarter
and are hard to predict from quarter to quarter. In addition, the volatility in the global economy and business cycles can impact
our quarterly revenue and operating income.

Clients and Marketing

Our consultants market the firm’s executive search and consulting services through two principal means: targeted client calling
and industry networking with clients and referral sources. These efforts are supported by proprietary databases, which provide
our consultants with information as to contacts made by their colleagues with particular referral sources, candidates and clients.
In addition, we benefit from a significant number of referrals generated by our reputation for high quality service and successfully
completed assignments, as well as repeat business resulting from our ongoing client relationships.

In support of client calling and networking, the practice teams as well as individual consultants also author and publish articles
and white papers on a variety of leadership and talent topics and trends around the world. Our consultants often present research
findings and talent insights at notable conferences and events as well. Our insights are sometimes acknowledged by major media
outlets and trade journalists. These efforts aid in the marketing of our services as well.

Either by agreement with the clients or to maintain strong client relationships, we may refrain from recruiting employees of
a client, or possibly other entities affiliated with that client, for a specified period of time but typically not more than one year
from the commencement of a search. We seek to mitigate any adverse effects of these off-limits arrangements by strengthening
our long-term relationships, allowing us to communicate our belief to prospective clients that we can conduct searches effectively
notwithstanding certain off-limits arrangements.

No single client accounted for more than 2% of our net revenue in 2019, and no more than 3% in 2018 or 2017. As a percentage

of total revenue, our top ten clients in aggregate accounted for approximately 7% in 2019, 6% in 2018, and 7% in 2017.

Information Management Systems

We rely on technology to support our consultants and staff in the search process. Our technology infrastructure consists of
internally developed databases containing candidate profiles and client records, coupled with online services, industry reference
sources, and Leadership Signature, an internally developed assessment tool. We use technology to manage and share information
on current and potential clients and candidates, to communicate to both internal and external constituencies and to support
administrative functions.

Our consulting business’ proprietary Web-based system, Culture Connect, is integral to the culture-shaping process. This
technology platform enables our consultants to administer, analyze and interpret online Corporate Culture Profiles™ surveys to
develop clarity around team and organizational need and desired outcomes. In addition, we gather data using our online Culture
Impact Survey™ to determine which culture-shaping concepts are being utilized by individuals and the team as a whole.

Professional Staff and Employees

Our professionals are generally categorized either as consultants or associates. Associates assist consultants by providing
research support, coordinating candidate contact and performing other engagement-related functions. As of December 31, 2019,
we had a headcount of 1,780, consisting of 451 consultants (380 related to Executive Search and 71 related to Heidrick Consulting),
591 associates and 738 other search, support and Global Operations Support staff.

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We promote our associates to consultants during the annual consultant promotion process, and we recruit our consultants from
other executive search or human capital firms, or in the case of Executive Search, consultants new to search who have worked in
industries or functions represented by our practices. In the latter case, these are often seasoned executives with extensive contacts
and outstanding reputations who are entering the search profession as a second career and whom we train in our techniques and
methodologies. Our Heidrick Consulting consultants are recruited for their executive business experience as well as their skills
in consulting and leadership advisory and often are former clients who are familiar with our consulting methodology. We are not
a party to any U.S.-based collective bargaining agreement, and we consider relations with our employees to be good.

Competition

The executive search industry is highly competitive. While we face competition to some degree from all firms in the industry,
we believe our most direct competition comes from four established global retained executive search firms that conduct searches
primarily for the most senior-level positions within an organization. In particular, our competitors include Egon Zehnder
International, Korn Ferry, Russell Reynolds Associates, and Spencer Stuart. To a lesser extent, we also face competition from
smaller boutique firms that specialize in certain regional markets or industry segments and Internet-based firms. Each firm with
which we compete is also a competitor in the marketplace for effective search consultants.

Overall, the search industry has relatively few barriers to entry; however, there are higher barriers to entry to compete with
global retained executive search firms that can provide leadership consulting services at the senior executive level. At this level,
clients rely more heavily on a search firm’s reputation, global access and the experience level of its consultants. We believe that
the segment of executive search in which we compete is more quality-sensitive than price-sensitive. As a result, we compete on
the level of service we offer, reflected by our client services specialties and, ultimately, by the quality of our search results. We
believe that our emphasis on senior-level executive search, the depth of experience of our search consultants and our global
presence enable us to compete favorably with other executive search firms.

Competition in the leadership consulting markets in which we operate is highly fragmented, with no universally recognized

market leaders.

Regulation

We are subject to the U.S. securities laws and general corporate and commercial laws and regulations of the locations which
we serve. These include regulations regarding anti-bribery, privacy and data protection, intellectual property, data security, data
retention, personal information, economic or other trade prohibitions or sanctions. In particular, we are subject to federal, state,
and foreign laws regarding privacy and protection of people's data. In the U.S., California has adopted the California Consumer
Privacy Act of 2018 (“CCPA”), which became effective January 1, 2020 and which provides a new private right of action for data
breaches and requires companies that process information on California residents to make new disclosures to consumers about
their data collection, use and sharing practices and allow consumers to opt out of certain data sharing with third parties. In addition,
several other U.S. states are considering adopting laws and regulations imposing obligations regarding the handling of personal
data. Foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States. Most
notably, certain aspects of our business are subject to the European Union's General Data Protection Regulation ("GDPR") which
became effective on May 25, 2018. We have a GDPR compliance program to facilitate our ongoing efforts to comply with GDPR
regulations. U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in
addition to government entities, are constantly evolving and can be subject to change.

ITEM 1A. RISK FACTORS

In addition to other information in this Form 10-K, the following risk factors should be carefully considered in evaluating our
business because such factors may have a material impact on our business, operating results, cash flows and financial condition.
The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties of which we are
unaware, or that we currently believe are not material, may also become important factors that adversely affect our business.

We depend on attracting, integrating, developing, managing, and retaining qualified consultants and senior leaders.

Our success depends upon our ability to attract, integrate, develop, manage and retain quality consultants with the skills and
experience necessary to fulfill our clients’ needs and achieve our operational and financial goals. Our ability to hire and retain
qualified consultants could be impaired by any diminution of our reputation, disparity in compensation relative to our competitors,
modifications to our total compensation philosophy or competitor hiring programs. If we cannot attract, hire, develop and retain
qualified consultants, our business, financial condition and results of operations may suffer. Our future success also depends upon
our ability to integrate newly hired consultants successfully into our operations and to manage the performance of our consultants.
7

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Failure to successfully integrate newly hired consultants or to manage the performance of our consultants could affect our
Failure to successfully integrate newly hired consultants or to manage the performance of our consultants could affect our
profitability by causing operating inefficiencies that could increase operating expenses and reduce operating income. There is also
profitability by causing operating inefficiencies that could increase operating expenses and reduce operating income. There is also
a risk that unanticipated turnover in senior leadership could stall company activity, interrupt strategic vision or lower productive
a risk that unanticipated turnover in senior leadership could stall company activity, interrupt strategic vision or lower productive
output which may adversely affect our business, financial condition and results of operations.
output which may adversely affect our business, financial condition and results of operations.

We may not be able to prevent our consultants from taking our clients with them to another firm.
We may not be able to prevent our consultants from taking our clients with them to another firm.

Our success depends upon our ability to develop and maintain strong, long-term relationships with our clients. Although we
Our success depends upon our ability to develop and maintain strong, long-term relationships with our clients. Although we
work on building these relationships between our firm and our clients, in many cases one or two consultants have primary
work on building these relationships between our firm and our clients, in many cases one or two consultants have primary
responsibility for a client relationship. When a consultant leaves one executive search firm and joins another, clients who have
responsibility for a client relationship. When a consultant leaves one executive search firm and joins another, clients who have
established relationships with the departing consultant may move their business to the consultant’s new employer. We may also
established relationships with the departing consultant may move their business to the consultant’s new employer. We may also
lose clients if the departing consultant has widespread name recognition or a reputation as a specialist in executing searches in a
lose clients if the departing consultant has widespread name recognition or a reputation as a specialist in executing searches in a
specific industry or management function. If we fail to retain important client relationships when a consultant departs our firm,
specific industry or management function. If we fail to retain important client relationships when a consultant departs our firm,
our business, financial condition and results of operations may be adversely affected.
our business, financial condition and results of operations may be adversely affected.

Our success depends on our ability to maintain our professional reputation and brand name.
Our success depends on our ability to maintain our professional reputation and brand name.

We depend on our overall professional reputation and brand name recognition to secure new engagements and hire qualified
We depend on our overall professional reputation and brand name recognition to secure new engagements and hire qualified
consultants. Our success also depends on the individual reputations of our consultants. We obtain many of our new engagements
consultants. Our success also depends on the individual reputations of our consultants. We obtain many of our new engagements
from existing clients or from referrals by those clients. A client who is dissatisfied with our work can adversely affect our ability
from existing clients or from referrals by those clients. A client who is dissatisfied with our work can adversely affect our ability
to secure new engagements. If any factor, including poor performance, hurts our reputation we may experience difficulties in
to secure new engagements. If any factor, including poor performance, hurts our reputation we may experience difficulties in
competing successfully for both new engagements and qualified consultants. Failure to maintain our professional reputation and
competing successfully for both new engagements and qualified consultants. Failure to maintain our professional reputation and
brand name could adversely affect our business, financial condition and results of operations.
brand name could adversely affect our business, financial condition and results of operations.

Our net revenue may be affected by adverse economic conditions.
Our net revenue may be affected by adverse economic conditions.

Demand for our services is affected by global economic conditions and the general level of economic activity in the geographic
Demand for our services is affected by global economic conditions and the general level of economic activity in the geographic
regions in which we operate. During periods of slowed economic activity many companies hire fewer permanent employees, and
regions in which we operate. During periods of slowed economic activity many companies hire fewer permanent employees, and
our business, financial condition and results of operations may be adversely affected. If unfavorable changes in economic conditions
our business, financial condition and results of operations may be adversely affected. If unfavorable changes in economic conditions
occur, our business, financial condition and results of operations could suffer.
occur, our business, financial condition and results of operations could suffer.

Because our clients may restrict us from recruiting their employees, we may be unable to fill or obtain new executive search
Because our clients may restrict us from recruiting their employees, we may be unable to fill or obtain new executive search
assignments.
assignments.

Clients frequently require us to refrain from recruiting certain of their employees when conducting executive searches on
Clients frequently require us to refrain from recruiting certain of their employees when conducting executive searches on
behalf of other clients. These restrictions generally remain in effect for no more than one year following the commencement of
behalf of other clients. These restrictions generally remain in effect for no more than one year following the commencement of
an engagement. However, the specific duration and scope of the off-limits arrangements depend on the length of the client
an engagement. However, the specific duration and scope of the off-limits arrangements depend on the length of the client
relationship, the frequency with which the client engages us to perform searches, the number of assignments we have performed
relationship, the frequency with which the client engages us to perform searches, the number of assignments we have performed
for the client and the potential for future business with the client.
for the client and the potential for future business with the client.

Client restrictions on recruiting their employees could hinder us from fulfilling executive searches. Additionally, if a prospective
Client restrictions on recruiting their employees could hinder us from fulfilling executive searches. Additionally, if a prospective
client believes that we are overly restricted from recruiting the employees of our existing clients, these prospective clients may
client believes that we are overly restricted from recruiting the employees of our existing clients, these prospective clients may
not engage us to perform their executive searches. As a result, our business, financial condition and results of operations may
not engage us to perform their executive searches. As a result, our business, financial condition and results of operations may
suffer.
suffer.

We face aggressive competition.
We face aggressive competition.

The global executive search industry is highly competitive and fragmented. We compete with other large global executive
The global executive search industry is highly competitive and fragmented. We compete with other large global executive
search firms, smaller specialty firms and, more recently with Internet-based firms and social media. Specialty firms may focus on
search firms, smaller specialty firms and, more recently with Internet-based firms and social media. Specialty firms may focus on
regional or functional markets or on particular industries to a greater extent than we do. Some of our competitors may possess
regional or functional markets or on particular industries to a greater extent than we do. Some of our competitors may possess
greater resources, greater name recognition and longer operating histories than we do in particular markets or practice areas, or
greater resources, greater name recognition and longer operating histories than we do in particular markets or practice areas, or
be willing to reduce their fees or agree to alternative pricing practices in order to attract clients and increase market share. Our
be willing to reduce their fees or agree to alternative pricing practices in order to attract clients and increase market share. Our
competitors may be further along in the development and design of technological solutions to meet client requirements.
competitors may be further along in the development and design of technological solutions to meet client requirements.

There are limited barriers to entry into the search industry and new search firms continue to enter the market. Executive search
There are limited barriers to entry into the search industry and new search firms continue to enter the market. Executive search
firms that have a smaller client base than we do may be subject to fewer off-limits arrangements. In addition, our clients or
firms that have a smaller client base than we do may be subject to fewer off-limits arrangements. In addition, our clients or
prospective clients may decide to perform executive searches using in-house personnel. Also, as Internet-based firms continue to
prospective clients may decide to perform executive searches using in-house personnel. Also, as Internet-based firms continue to
evolve, they may develop offerings similar to or more expansive than ours, thereby increasing competition for our services or
evolve, they may develop offerings similar to or more expansive than ours, thereby increasing competition for our services or
more broadly disrupting the executive search industry. As a result, we may not be able to continue to compete effectively with
more broadly disrupting the executive search industry. As a result, we may not be able to continue to compete effectively with
existing or potential competitors and we may not be able to implement our leadership strategy effectively. Our inability to meet
existing or potential competitors and we may not be able to implement our leadership strategy effectively. Our inability to meet
these competitive challenges could have an adverse effect on our business, financial condition and results of operations.
these competitive challenges could have an adverse effect on our business, financial condition and results of operations.

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We rely heavily on information management systems.
We rely heavily on information management systems.

Our success depends upon our ability to store, retrieve, process and manage substantial amounts of information. To achieve
Our success depends upon our ability to store, retrieve, process and manage substantial amounts of information. To achieve
our goals, we must continue to improve and upgrade our information management systems. We may be unable to license, design
our goals, we must continue to improve and upgrade our information management systems. We may be unable to license, design
and implement, in a cost-effective and timely manner, improved information systems that allow us to compete effectively. In
and implement, in a cost-effective and timely manner, improved information systems that allow us to compete effectively. In
addition, business process reengineering efforts may result in a change in software platforms and programs. Such efforts may result
addition, business process reengineering efforts may result in a change in software platforms and programs. Such efforts may result
in an acceleration of depreciation expense over the shortened expected remaining life of the software and present transitional
in an acceleration of depreciation expense over the shortened expected remaining life of the software and present transitional
problems. Problems or issues with our proprietary search system or other factors may result in interruptions or loss in our information
problems. Problems or issues with our proprietary search system or other factors may result in interruptions or loss in our information
processing capabilities which may adversely affect our business, financial condition and results of operations.
processing capabilities which may adversely affect our business, financial condition and results of operations.

We face the risk of liability in the services we perform.
We face the risk of liability in the services we perform.

We are exposed to potential claims with respect to the executive search process. A client could assert a claim for violations
We are exposed to potential claims with respect to the executive search process. A client could assert a claim for violations
of off-limits arrangements, breaches of confidentiality agreements or professional malpractice. The growth and development of
of off-limits arrangements, breaches of confidentiality agreements or professional malpractice. The growth and development of
our consulting services brings with it the potential for new types of claims. In addition, candidates and client employees could
our consulting services brings with it the potential for new types of claims. In addition, candidates and client employees could
assert claims against us. Possible claims include failure to maintain the confidentiality of the candidate’s employment search or
assert claims against us. Possible claims include failure to maintain the confidentiality of the candidate’s employment search or
for discrimination or other violations of the employment laws or malpractice. In various countries, we are subject to data protection
for discrimination or other violations of the employment laws or malpractice. In various countries, we are subject to data protection
laws impacting the processing of candidate information. We maintain professional liability insurance in amounts and coverage
laws impacting the processing of candidate information. We maintain professional liability insurance in amounts and coverage
that we believe are adequate; however, we cannot guarantee that our insurance will cover all claims or that coverage will always
that we believe are adequate; however, we cannot guarantee that our insurance will cover all claims or that coverage will always
be available. Significant uninsured liabilities could have a negative impact on our business, financial condition and results of
be available. Significant uninsured liabilities could have a negative impact on our business, financial condition and results of
operations.
operations.

Data security, data privacy and data protection laws, such as GDPR and CCPA , and other evolving regulations and cross-
Data security, data privacy and data protection laws, such as GDPR and CCPA , and other evolving regulations and cross-
border data transfer restrictions, may limit the use of our services and adversely affect our business.
border data transfer restrictions, may limit the use of our services and adversely affect our business.

We are or may become subject to a variety of laws and regulations in the European Union (including GDPR), United States
We are or may become subject to a variety of laws and regulations in the European Union (including GDPR), United States
(including CCPA) and abroad regarding data privacy, protection and security. As these laws continue to evolve, we may be required
(including CCPA) and abroad regarding data privacy, protection and security. As these laws continue to evolve, we may be required
to make changes to, or eliminate altogether of, our services, solutions and/or products so as to enable the Company and/or our
to make changes to, or eliminate altogether of, our services, solutions and/or products so as to enable the Company and/or our
clients to meet the new legal requirements, including by taking on more onerous obligations in our contracts, limiting or eliminating
clients to meet the new legal requirements, including by taking on more onerous obligations in our contracts, limiting or eliminating
our storage, transfer and processing of data and, in some cases, limiting or eliminating our service and/or solution offerings in
our storage, transfer and processing of data and, in some cases, limiting or eliminating our service and/or solution offerings in
certain locations. Changes in these laws may also increase our potential exposure through significantly higher potential penalties
certain locations. Changes in these laws may also increase our potential exposure through significantly higher potential penalties
for non-compliance or limitations on the use or transfer of data. The costs of compliance with, and other burdens imposed by, such
for non-compliance or limitations on the use or transfer of data. The costs of compliance with, and other burdens imposed by, such
laws and regulations and client demands in this area may limit the use of, or demand for, our services, solutions and/or products,
laws and regulations and client demands in this area may limit the use of, or demand for, our services, solutions and/or products,
make it more difficult and costly to meet client expectations, or lead to significant fines, penalties or liabilities for noncompliance,
make it more difficult and costly to meet client expectations, or lead to significant fines, penalties or liabilities for noncompliance,
any of which could adversely affect our business, financial condition and results of operations.
any of which could adversely affect our business, financial condition and results of operations.

In addition, due to the uncertainty and potentially conflicting interpretations of these laws, it is possible that such laws and
In addition, due to the uncertainty and potentially conflicting interpretations of these laws, it is possible that such laws and
regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with
regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with
other rules or our practices. Any failure or perceived failure by us to comply with applicable laws or satisfactorily protect personal
other rules or our practices. Any failure or perceived failure by us to comply with applicable laws or satisfactorily protect personal
information could result in governmental enforcement actions, litigation, or negative publicity, any of which could inhibit sales
information could result in governmental enforcement actions, litigation, or negative publicity, any of which could inhibit sales
of our services, solutions and/or products.
of our services, solutions and/or products.

Our multinational operations may be adversely affected by social, political, regulatory, legal and economic, and public
Our multinational operations may be adversely affected by social, political, regulatory, legal and economic, and public
health risks.
health risks.

We generate substantial revenue outside the United States. We offer our services through a global network of offices around
We generate substantial revenue outside the United States. We offer our services through a global network of offices around
the world. Our ability to effectively serve our clients is dependent upon our ability to successfully leverage our operating model
the world. Our ability to effectively serve our clients is dependent upon our ability to successfully leverage our operating model
across our existing and any future locations, maintain effective management controls over all of our locations to ensure, among
across our existing and any future locations, maintain effective management controls over all of our locations to ensure, among
other things, compliance with applicable laws, rules and regulations, and instill our core values in all of our personnel at each of
other things, compliance with applicable laws, rules and regulations, and instill our core values in all of our personnel at each of
these and any future locations. We are exposed to the risk of changes in social, political, legal and economic conditions inherent
these and any future locations. We are exposed to the risk of changes in social, political, legal and economic conditions inherent
in our operations, which could have a significant impact on our business, financial condition and results of operations. In addition,
in our operations, which could have a significant impact on our business, financial condition and results of operations. In addition,
we conduct business in countries where the legal systems, local laws and trade practices are unsettled and evolving. Commercial
we conduct business in countries where the legal systems, local laws and trade practices are unsettled and evolving. Commercial
laws in these countries are sometimes vague, arbitrary and inconsistently applied. Under these circumstances, it is difficult for us
laws in these countries are sometimes vague, arbitrary and inconsistently applied. Under these circumstances, it is difficult for us
to determine at all times the exact requirements of such local laws. If we fail to comply with local laws, our business, financial
to determine at all times the exact requirements of such local laws. If we fail to comply with local laws, our business, financial
condition and results of operations could suffer. In addition, the global nature of our operations poses challenges to our management,
condition and results of operations could suffer. In addition, the global nature of our operations poses challenges to our management,
and financial and accounting systems. Failure to meet these challenges could adversely affect our business, financial condition
and financial and accounting systems. Failure to meet these challenges could adversely affect our business, financial condition
and results of operations. We could also be adversely affected by a public health epidemic, including the recent outbreak of
and results of operations. We could also be adversely affected by a public health epidemic, including the recent outbreak of
coronavirus in China. Consequences of the coronavirus outbreak have included disruptions or restrictions on our ability to travel
coronavirus in China. Consequences of the coronavirus outbreak have included disruptions or restrictions on our ability to travel
and temporary closures our China offices. Our business, financial condition and results of operations could suffer to the extent
and temporary closures our China offices. Our business, financial condition and results of operations could suffer to the extent
that the coronavirus outbreak harms the Chinese economy in general.
that the coronavirus outbreak harms the Chinese economy in general.

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A significant currency fluctuation between the U.S. dollar and other currencies could adversely impact our operating
A significant currency fluctuation between the U.S. dollar and other currencies could adversely impact our operating
income.
income.

With our operations in the Americas, Europe and Asia Pacific, we conduct business using various currencies. In 2019,
With our operations in the Americas, Europe and Asia Pacific, we conduct business using various currencies. In 2019,
approximately 40% of our net revenue was generated outside the United States. As we typically transact business in the local
approximately 40% of our net revenue was generated outside the United States. As we typically transact business in the local
currency of our subsidiaries, our profitability may be impacted by the translation of foreign currency financial statements into U.S.
currency of our subsidiaries, our profitability may be impacted by the translation of foreign currency financial statements into U.S.
dollars. Significant long-term fluctuations in relative currency values, in particular an increase in the value of the U.S. dollar against
dollars. Significant long-term fluctuations in relative currency values, in particular an increase in the value of the U.S. dollar against
foreign currencies, could have an adverse effect on our business, financial condition and results of operations.
foreign currencies, could have an adverse effect on our business, financial condition and results of operations.

We may not be able to align our cost structure with net revenue.
We may not be able to align our cost structure with net revenue.

We must ensure that our costs and workforce continue to be in proportion to demand for our services. Failure to align our cost
We must ensure that our costs and workforce continue to be in proportion to demand for our services. Failure to align our cost

structure and headcount with net revenue could adversely affect our business, financial condition and results of operations.
structure and headcount with net revenue could adversely affect our business, financial condition and results of operations.

Unfavorable tax law changes and tax authority rulings may adversely affect results.
Unfavorable tax law changes and tax authority rulings may adversely affect results.

We are subject to income taxes in the United States and in various foreign jurisdictions. Domestic and international tax liabilities
We are subject to income taxes in the United States and in various foreign jurisdictions. Domestic and international tax liabilities
are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be adversely affected by changes
are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be adversely affected by changes
in the mix of earnings among countries with differing statutory tax rates, or changes in the valuation allowance of deferred tax
in the mix of earnings among countries with differing statutory tax rates, or changes in the valuation allowance of deferred tax
assets or tax laws. The amount of income taxes and other taxes are subject to ongoing audits by U.S. federal, state and local tax
assets or tax laws. The amount of income taxes and other taxes are subject to ongoing audits by U.S. federal, state and local tax
authorities and by non-U.S. authorities. If these audits result in assessments different from amounts recorded, future financial
authorities and by non-U.S. authorities. If these audits result in assessments different from amounts recorded, future financial
results may include unfavorable tax adjustments.
results may include unfavorable tax adjustments.

We may not be able to generate sufficient profits to realize the benefit of our net deferred tax assets.
We may not be able to generate sufficient profits to realize the benefit of our net deferred tax assets.

We establish valuation allowances against deferred tax assets when there is insufficient evidence that we will be able to realize
We establish valuation allowances against deferred tax assets when there is insufficient evidence that we will be able to realize
the benefit of these deferred tax assets. We reassess our ability to realize deferred tax assets as facts and circumstances dictate. If
the benefit of these deferred tax assets. We reassess our ability to realize deferred tax assets as facts and circumstances dictate. If
after future assessments of our ability to realize the deferred tax assets we determine that a lesser or greater allowance is required,
after future assessments of our ability to realize the deferred tax assets we determine that a lesser or greater allowance is required,
we record a reduction or increase to the income tax expense and the valuation allowance in the period of such determination.
we record a reduction or increase to the income tax expense and the valuation allowance in the period of such determination.
The uncertainty surrounding the future realization of our net deferred tax assets could adversely impact our financial condition
The uncertainty surrounding the future realization of our net deferred tax assets could adversely impact our financial condition
and results of operations.
and results of operations.

We may experience impairment of our goodwill, other intangible assets and other long-lived assets.
We may experience impairment of our goodwill, other intangible assets and other long-lived assets.

In accordance with generally accepted accounting principles, we perform assessments of the carrying value of our goodwill
In accordance with generally accepted accounting principles, we perform assessments of the carrying value of our goodwill
at least annually, and we review our goodwill, other intangible assets and other long-lived assets for impairment whenever events
at least annually, and we review our goodwill, other intangible assets and other long-lived assets for impairment whenever events
occur or circumstances indicate that a carrying amount of these assets may not be recoverable. These events and circumstances
occur or circumstances indicate that a carrying amount of these assets may not be recoverable. These events and circumstances
include a significant change in business climate, attrition of key personnel, changes in financial condition or results of operations,
include a significant change in business climate, attrition of key personnel, changes in financial condition or results of operations,
a prolonged decline in our stock price and market capitalization, competition, and other factors. In performing these assessments,
a prolonged decline in our stock price and market capitalization, competition, and other factors. In performing these assessments,
we must make assumptions regarding the estimated fair value of our goodwill and other intangible assets. These assumptions
we must make assumptions regarding the estimated fair value of our goodwill and other intangible assets. These assumptions
include estimates of future market growth and trends, forecasted revenue and costs, capital investments, discount rates, and other
include estimates of future market growth and trends, forecasted revenue and costs, capital investments, discount rates, and other
variables. If the fair market value of one of our reporting units or other long-term assets is less than the carrying amount of the
variables. If the fair market value of one of our reporting units or other long-term assets is less than the carrying amount of the
related assets, we would be required to record an impairment charge. Due to continual changes in market and general business
related assets, we would be required to record an impairment charge. Due to continual changes in market and general business
conditions, we cannot predict whether, and to what extent, our goodwill and long-lived intangible assets may be impaired in future
conditions, we cannot predict whether, and to what extent, our goodwill and long-lived intangible assets may be impaired in future
periods. Any resulting impairment loss could have an adverse impact on our business, financial condition and results of operations.
periods. Any resulting impairment loss could have an adverse impact on our business, financial condition and results of operations.

Our ability to execute and integrate future acquisitions, if any, could negatively affect our business and profitability.
Our ability to execute and integrate future acquisitions, if any, could negatively affect our business and profitability.

Our future success may depend in part on our ability to complete the integration of acquisition targets successfully into our
Our future success may depend in part on our ability to complete the integration of acquisition targets successfully into our

operations. The process of executing and integrating an acquired business may subject us to a number of risks, including:
operations. The process of executing and integrating an acquired business may subject us to a number of risks, including:

•
•

diversion of management attention;
diversion of management attention;

failure to successfully further develop the acquired business;
failure to successfully further develop the acquired business;

amortization of intangible assets, adversely affecting our reported results of operations;
amortization of intangible assets, adversely affecting our reported results of operations;

inability to retain and/or integrate the management, key personnel and other employees of the acquired business;
inability to retain and/or integrate the management, key personnel and other employees of the acquired business;

inability to properly integrate businesses resulting in operating inefficiencies;
inability to properly integrate businesses resulting in operating inefficiencies;

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•
•

inability to establish uniform standards, disclosure controls and procedures, internal control over financial reporting and
inability to establish uniform standards, disclosure controls and procedures, internal control over financial reporting and
other systems, procedures and policies in a timely manner;
other systems, procedures and policies in a timely manner;

inability to retain the acquired company’s clients;
inability to retain the acquired company’s clients;

exposure to legal claims for activities of the acquired business prior to acquisition; and
exposure to legal claims for activities of the acquired business prior to acquisition; and

inability to generate revenues to offset any new liabilities assumed and expenses associated with an acquired business.
inability to generate revenues to offset any new liabilities assumed and expenses associated with an acquired business.

If our acquisitions are not successfully executed and integrated, our business, financial condition and results of operations, as
If our acquisitions are not successfully executed and integrated, our business, financial condition and results of operations, as

well as our professional reputation, could be adversely affected.
well as our professional reputation, could be adversely affected.

We have anti-takeover provisions that make an acquisition of us difficult and expensive.
We have anti-takeover provisions that make an acquisition of us difficult and expensive.

Anti-takeover provisions in our Certificate of Incorporation, our Bylaws and the Delaware laws make it difficult and expensive
Anti-takeover provisions in our Certificate of Incorporation, our Bylaws and the Delaware laws make it difficult and expensive
for someone to acquire us in a transaction which is not approved by our Board of Directors. Some of the provisions in our Certificate
for someone to acquire us in a transaction which is not approved by our Board of Directors. Some of the provisions in our Certificate
of Incorporation and Bylaws include:
of Incorporation and Bylaws include:

•
•

limitations on the removal of directors;
limitations on the removal of directors;

limitations on stockholder actions; and
limitations on stockholder actions; and

the ability to issue one or more series of preferred stock by action of our Board of Directors.
the ability to issue one or more series of preferred stock by action of our Board of Directors.

These provisions could discourage an acquisition attempt or other transaction in which stockholders could receive a premium
These provisions could discourage an acquisition attempt or other transaction in which stockholders could receive a premium

over the then-current market price for the common stock.
over the then-current market price for the common stock.

Our ability to access additional credit could be limited.
Our ability to access additional credit could be limited.

Banks can be expected to strictly enforce the terms of our credit agreement. Although we are currently in compliance with
Banks can be expected to strictly enforce the terms of our credit agreement. Although we are currently in compliance with
the financial covenants of our revolving credit facility, a deterioration of economic conditions may negatively impact our business
the financial covenants of our revolving credit facility, a deterioration of economic conditions may negatively impact our business
resulting in our failure to comply with these covenants, which could limit our ability to borrow funds under our credit facility or
resulting in our failure to comply with these covenants, which could limit our ability to borrow funds under our credit facility or
from other borrowing facilities in the future. In such circumstances, we may not be able to secure alternative financing or may
from other borrowing facilities in the future. In such circumstances, we may not be able to secure alternative financing or may
only be able to do so at significantly higher costs.
only be able to do so at significantly higher costs.

Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted cyber-related attacks
Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted cyber-related attacks
could pose a risk to our systems, networks, solutions, services and data.
could pose a risk to our systems, networks, solutions, services and data.

Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-related attacks pose a risk
Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-related attacks pose a risk
to the security of our systems and networks and the confidentiality, availability and integrity of our data. We have a program in
to the security of our systems and networks and the confidentiality, availability and integrity of our data. We have a program in
place to detect and respond to data security incidents. However, we remain potentially vulnerable to additional known or unknown
place to detect and respond to data security incidents. However, we remain potentially vulnerable to additional known or unknown
threats. We also have access to sensitive, confidential or personal data or information that is subject to privacy and security laws,
threats. We also have access to sensitive, confidential or personal data or information that is subject to privacy and security laws,
regulations and client-imposed controls. Despite our efforts to protect such information or systems, we may be vulnerable to
regulations and client-imposed controls. Despite our efforts to protect such information or systems, we may be vulnerable to
security breaches, ransomware, theft, lost data, employee errors and/or malfeasance that could potentially lead to the compromising
security breaches, ransomware, theft, lost data, employee errors and/or malfeasance that could potentially lead to the compromising
of sensitive, confidential or personal data or information, improper use of our systems or networks, unauthorized access, use,
of sensitive, confidential or personal data or information, improper use of our systems or networks, unauthorized access, use,
disclosure, modification or destruction of information. In addition, a cyber-related attack could result in other negative
disclosure, modification or destruction of information. In addition, a cyber-related attack could result in other negative
consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, litigation or
consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, litigation or
regulatory action which could result in a negative impact to our results of operations.
regulatory action which could result in a negative impact to our results of operations.

The expansion of social media platforms presents new risks and challenges that can cause damage to our brand and
The expansion of social media platforms presents new risks and challenges that can cause damage to our brand and
reputation.
reputation.

There has been a marked increase in the use of social media platforms, including weblogs (or blogs), social media websites
There has been a marked increase in the use of social media platforms, including weblogs (or blogs), social media websites
and other forms of Internet-based communications, which allow individuals access to a broad audience of consumers and other
and other forms of Internet-based communications, which allow individuals access to a broad audience of consumers and other
interested persons. The inappropriate and/or unauthorized use of such media vehicles by our clients or employees could increase
interested persons. The inappropriate and/or unauthorized use of such media vehicles by our clients or employees could increase
our costs, cause damage to our brand, lead to litigation or result in information leakage, including the improper collection and/or
our costs, cause damage to our brand, lead to litigation or result in information leakage, including the improper collection and/or
dissemination of personally identifiable information of candidates and clients. In addition, negative or inaccurate posts or comments
dissemination of personally identifiable information of candidates and clients. In addition, negative or inaccurate posts or comments
about us on any social networking platforms could damage our reputation, brand image and goodwill.
about us on any social networking platforms could damage our reputation, brand image and goodwill.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate headquarters is located in Chicago, Illinois. We have leased office space in 51 cities in 25 countries around the
world. All of our offices are leased. We do not own any real estate. The aggregate office space under lease was 460,263 square
feet as of December 31, 2019. Our office leases call for future minimum lease payments of approximately $120.6 million and
have terms that expire between 2020 and 2030, exclusive of renewal options that we can exercise.

Our office space by geographic segment as of December 31, 2019 is as follows:

Americas
Europe
Asia Pacific
Total

ITEM 3. LEGAL PROCEEDINGS

Square
Footage

259,661
111,337
89,265
460,263

We have contingent liabilities from various pending claims and litigation matters arising in the ordinary course of our business,
some of which involve claims for damages that may be substantial in amount. Some of these matters are covered by insurance.
Based upon information currently available, we believe the ultimate resolution of such claims and litigation will not have a material
adverse effect on our financial condition, results of operations or liquidity.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

PART II

Market for our Common Stock

Our common stock, $0.01 par value, is listed on the Nasdaq Global Stock market under the symbol "HSII".

Performance Graph

We have presented below a graph which compares the cumulative total stockholder return on our common shares with the
cumulative total stockholder return of the Standard & Poor’s SmallCap 600 Index and the Standard & Poor’s Composite 1500
Human Resource and Employment Services Index. The S&P Composite 1500 Human Resource & Employment Services Index
includes 11 companies in related businesses, including Heidrick & Struggles. Cumulative total return for each of the periods shown
in the performance graph is measured assuming an initial investment of $100 on December 31, 2014.

The stock price performance depicted in this graph is not necessarily indicative of future price performance. This graph will
not be deemed to be filed as part of this Form 10-K, and will not be deemed to be incorporated by reference by any general
statement incorporating this Form 10-K into any filing by us under the Securities Act of 1933 or the Exchange Act, except to the
extent we specifically incorporate this information by reference.

* Assuming $100 invested on 12/31/14 in HSII or index, including reinvestment of dividends.
Prepared by: Zacks Investment Research, Inc.
Copyright: Standard and Poor’s, Inc.

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Dividends

From September 2007 through December 2018, we paid a quarterly cash dividend of $0.13 per share as approved by our
Board of Directors. Beginning with the dividend paid on March 22, 2019, we began paying a quarterly cash dividend of $0.15 per
share as approved by our Board of Directors. In 2019, the total cash dividend paid was $0.60 per share.

In February 2020, our Board of Directors approved a quarterly dividend of $0.15 per share on our common stock which will

be paid on March 20, 2020 to shareholders of record as of March 6, 2020.

In connection with the quarterly cash dividend, we also pay a dividend equivalent on outstanding restricted stock units. The
amounts related to the dividend equivalent payments for restricted stock units are accrued over the vesting period and paid upon
vesting. In 2019 and 2018, we paid $0.4 million and $0.2 million, respectively, in dividend equivalent payments.

Issuer Purchases of Equity Securities

On February 11, 2008, we announced that our Board of Directors authorized management to repurchase shares of our common
stock with an aggregate purchase price of up to $50 million. We may from time to time and as business conditions warrant purchase
shares of our common stock on the open market or in negotiated or block trades. No time limit has been set for completion of this
program. We did not repurchase any shares of our common stock in 2019. The most recent purchase of shares of common stock
occurred during the year ended December 31, 2012. As of December 31, 2019, we have purchased 1,038,670 shares of our common
stock for a total of $28.3 million and $21.7 million remains available for future purchases under the authorization.

Unregistered Sales of Equity Securities

During the year ended December 31, 2019, we issued 38,553 shares of our common stock as partial consideration for our
acquisition of 2GET Holdings Limited as described in Note 8, Acquisitions. The shares were issued in reliance on Section 4(a)(2)
of the Securities Act of 1933 as a transaction not involving any public offering.

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ITEM 6. SELECTED FINANCIAL DATA

The selected financial data presented below has been derived from our audited consolidated financial statements. The data as
of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017, is derived from the audited current
and historical consolidated financial statements, which are included elsewhere in this Form 10-K. Other than noted below, the data
as of December 31, 2017, 2016 and 2015, and for the years ended December 31, 2016 and 2015, are derived from audited historical
consolidated financial statements, which are not included in this report. The data set forth is qualified in its entirety by, and should
be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the
audited consolidated financial statements, the notes thereto, and the other financial data and statistical information included in this
Form 10-K.

Statements of Operations Data:

Revenue:

Revenue before reimbursements (net revenue)

$706,924

$716,023

$621,400

$582,390

$531,139

Year Ended December 31,

2019

2018

2017

2016

2015

(in thousands, except per share and other operating data)

Reimbursements

Total revenue
Operating expenses:
Salaries and benefits

General and administrative expenses

Impairment charges (1)

Restructuring charges (2)

Reimbursed expenses

Total operating expenses

Operating income (loss)

Non-operating income (expense):

Interest, net

Other, net

Net non-operating income (expense)

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

Basic weighted average common shares outstanding

Diluted weighted average common shares outstanding

Basic net income (loss) per common share

Diluted net income (loss) per common share
Cash dividends paid per share

Balance Sheet Data (at end of period):

Working capital (3)

Total assets (3)

Long-term debt, less current maturities

Stockholders’ equity

18,690

19,632

18,656

18,516

17,172

725,614

735,655

640,056

600,906

548,311

501,791

506,349

434,219

400,070

369,385

137,492

140,817

147,316

147,087

127,692

—

4,130

18,690

—

19,632

50,722

15,666

18,656

—

18,516

17,172

662,103

666,798

63,511

68,857

666,579
(26,523)

565,673

514,249

35,233

34,062

2,880

2,898

5,778

69,289

22,420

1,141

494

1,635

70,492

21,197

$ 46,869

$ 49,295

19,103

19,551

18,917

19,532

385
(3,280)
(2,895)
(29,418)
19,217

244

2,289

2,533

37,766

22,353
$ (48,635) $ 15,413
18,540

18,735

18,939

(122)
(2,386)
(2,508)
31,554

14,422

$ 17,132

18,334

18,715

2.45

2.40

0.60

2.61

2.52

0.52

(2.60) $
(2.60) $
$
0.52

0.83

0.81

0.52

0.93

0.92

0.52

$149,140

$131,916

$ 77,998

$ 77,838

$ 79,533

844,173

700,629

587,204

581,502

572,718

—

309,115

267,156

212,705

258,590

254,802

(1) Includes impairment charges of $50.7 million related to Heidrick Consulting in 2017 (See Note 9, Goodwill and Other Intangible Assets).
(2) Includes restructuring charges of $4.1 million and $15.7 million in 2019 and 2017, respectively. The 2019 charges primarily consist of
employee-related costs associated with severance arrangements. The 2017 charges consist of $13.1 million of employee-related costs
associated with severance arrangements, $2.3 million in professional fees and other expenses and $0.3 million in real estate related
expenses (See Note 15, Restructuring).

(3) As adjusted for the adoption of ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes in 2015.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations as well as other sections of this
annual report on Form 10-K contain forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides
a safe harbor for forward-looking statements. Forward-looking statements are not historical facts, but instead represent only our
beliefs, assumptions, expectations, estimates, forecasts and projections regarding future events, many of which, by their nature,
are inherently uncertain and outside our control. These statements include statements other than historical information or
statements of current condition and may relate to our future plans and objectives and results. By identifying these statements for
you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly
materially, from the anticipated results and financial condition indicated in these forward-looking statements. Important factors
that could cause our actual results and financial condition to differ from those indicated in the forward-looking statements include,
among others, those discussed under the Section heading “Risk Factors” in Part I, Item 1A of this Form 10-K.

Factors that may affect the outcome of the forward-looking statements include, among other things, leadership changes, our
ability to attract, integrate, develop, manage and retain qualified consultants and senior leaders; our ability to prevent our
consultants from taking our clients with them to another firm; our ability to maintain our professional reputation and brand name;
the fact that our net revenue may be affected by adverse economic conditions; our clients’ ability to restrict us from recruiting
their employees; the aggressive competition we face; our heavy reliance on information management systems; the fact that we
face the risk of liability in the services we perform; the fact that data security, data privacy and data protection laws and other
evolving regulations and cross-border data transfer restrictions may limit the use of our services and adversely affect our business;
social, political, regulatory and legal risks in markets where we operate; the impact of foreign currency exchange rate fluctuations;
the fact that we may not be able to align our cost structure with net revenue; unfavorable tax law changes and tax authority rulings;
our ability to realize our tax losses; the timing of the establishment or reversal of valuation allowance on deferred tax assets; any
impairment of our goodwill, other intangible assets and other long-lived assets; our ability to execute and integrate future
acquisitions; the fact that we have anti-takeover provisions that make an acquisition of us difficult and expensive; our ability to
access additional credit; and the increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted
cyber-related attacks that could pose a risk to our systems, networks, solutions, services and data. We undertake no obligation to
update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We undertake
no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for years
2019 and 2018. for the discussion of changes from 2017 to 2018 and other financial information related to 2017, refer to "Item
7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-
K for the year ended December 31, 2018. This document was filed with the SEC on February 26, 2019.

Executive Overview

Our Business

We are a leadership advisory firm providing executive search and consulting services. We help our clients build leadership
teams by facilitating the recruitment, management and development of senior executives. We believe focusing on top-level services
offers us several advantages that include access to and influence with key decision makers, increased potential for recurring search
consulting engagements, higher fees per search, enhanced brand visibility and a leveraged global footprint, which create added
barriers to entry for potential competitors. Working at the top of client organizations also allows us to attract and retain high-
caliber consultants.

In addition to executive search, we provide consulting services including executive leadership assessment, leadership, team
and board development, succession planning, talent strategy, people performance, inter-team collaboration, culture shaping and
organizational transformation.

We provide our services to a broad range of clients through the expertise of over 450 consultants located in major cities around
the world. Our executive search services are provided on a retained basis. Revenue before reimbursements of out-of-pocket
expenses (“net revenue”) consists of retainers and indirect expenses billed to clients. Typically, we are paid a retainer for our
executive search services equal to approximately one-third of the estimated first-year compensation for the position to be filled.
In addition, if the actual compensation of a placed candidate exceeds the estimated compensation, we often are authorized to bill
the client for one-third of the excess. Indirect expenses are calculated as a percentage of the retainer with certain dollar limits per
search.

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Key Performance Indicators

We manage and assess our performance through various means, with primary financial and operational measures including
net revenue, operating income, operating margin, Adjusted EBITDA (non-GAAP) and Adjusted EBITDA margin (non-GAAP).
Executive Search and Heidrick Consulting performance is also measured using consultant headcount. Specific to Executive Search,
confirmation trends, consultant productivity and average revenue per search are used to measure performance.

Revenue is driven by market conditions and a combination of the number of executive search engagements and consulting
projects and the average revenue per search or project. With the exception of compensation expense, incremental increases in
revenue do not necessarily result in proportionate increases in costs, particularly operating and administrative expenses, thus
creating the potential to improve operating margins.

The number of consultants, confirmation trends, number of searches or projects completed, productivity levels and the average

revenue per search or project will vary from quarter to quarter, affecting net revenue and operating margin.

Our Compensation Model

At the Executive Search consultant level, there are fixed and variable components of compensation. Individuals are rewarded
for their performance based on a system that directly ties a portion of their compensation to the amount of net revenue for which
they are responsible. A portion of the reward may be based upon individual performance against a series of non-financial measures.
Credit towards the variable portion of an executive search consultant’s compensation is earned by generating net revenue for
winning and executing work. Each quarter, we review and update the expected annual performance of all Executive Search
consultants and accrue variable compensation accordingly. The amount of variable compensation that is accrued for each Executive
Search consultant is based on a tiered payout model. Overall Company performance determines the amount available for total
variable compensation. The more net revenue that is generated by the consultant, the higher the percentage credited towards the
consultant’s variable compensation and thus accrued by our Company as expense.

At the Heidrick Consulting consultant level, there are also fixed and variable components of compensation. Overall
compensation is determined based on the total economic contribution of the Heidrick Consulting segment to the business as a
whole. Individual consultant compensation can vary and is derived from credits earned for delivering client work plus credits
earned for contributions of intellectual and human capital, client relationship development and consulting practice development.
Each quarter, we review and update the expected annual performance of all Heidrick Consulting consultants and accrue variable
compensation accordingly.

The mix of individual consultants who generate revenue in Executive Search and economic contributions in Heidrick
Consulting can significantly affect the total amount of compensation expense recorded, which directly impacts operating margin.
As a result, the variable portion of the compensation expense may fluctuate significantly from quarter to quarter. The total variable
compensation is discretionary and is based on Company-wide financial targets approved by the Human Resources and
Compensation Committee of the Board of Directors.

A portion of our Executive Search consultants’ and management cash bonuses is deferred and paid over a three-year vesting
period. The compensation expense related to the amounts being deferred is recognized on a graded vesting attribution method
over the requisite service period. This service period begins on January 1 of the respective fiscal year and continues through the
deferral date, which coincides with our bonus payments in the first quarter of the following year, and for an additional three-year
vesting period. The deferrals are recorded in Accrued salaries and benefits in the Consolidated Balance Sheets.

2019 Overview

Consolidated net revenue was $706.9 million for the year ended December 31, 2019, a decrease of $9.1 million, or 1.3%,
compared to 2018. Executive Search net revenue was $646.4 million in 2019, a decrease of $6.5 million compared to 2018. The
decrease in Executive Search net revenue was the result of declines in Europe and Asia Pacific, partially offset by growth in the
Americas. Our acquisition of 2Get in September 2019 also contributed to Executive Search net revenue. The number of Executive
Search consultants was 380 as of December 31, 2019, compared to 353 as of December 31, 2018. Executive Search productivity,
as measured by annualized net Executive Search revenue per consultant, was $1.7 million and $1.9 million for the years ended
December 31, 2019 and 2018, respectively. The number of confirmed searches decreased 4.6% in 2019 compared to 2018. The
average revenue per executive search increased to $132,000 in 2019 compared to $127,300 in 2018. Heidrick Consulting net
revenue decreased $2.6 million, or 4.1%, to $60.6 million in 2019, from $63.1 million in 2018. The number of Heidrick Consulting
consultants was 71 as of December 31, 2019, compared to 66 as of December 31, 2018.

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Operating income as a percentage of net revenue was 9.0% in 2019, compared to 9.6% in 2018. The change in operating
income was primarily due to a decrease in net revenue of $9.1 million and $4.1 million of restructuring charges in 2019, partially
offset by decreases in salaries and benefits expense and general and administrative expense of $4.6 million and $3.3 million,
respectively. Salaries and benefits expense as a percentage of net revenue was 71.0% in 2019 and 70.7% in 2018. General and
administrative expense as a percentage of net revenue was 19.4% in 2019 and 19.7% in 2018.

We ended the year with combined cash, cash equivalents, and marketable securities of $332.9 million, an increase of $53.0
million compared to $279.9 million at December 31, 2018. The increase was primarily due to the strong cash inflows from
operations partially offset by acquisition spend and larger bonus payments year-over-year. We pay the majority of bonuses in the
first quarter following the year in which they were earned. Employee bonuses are accrued throughout the year and are based on
the Company’s performance and the performance of the individual employee. We expect to pay approximately $205.0 million in
bonuses related to 2019 performance in March and April 2020. In January 2020, we paid approximately $17.1 million in cash
bonuses deferred from prior years.

2020 Outlook

We are currently forecasting 2020 first quarter net revenue of between $165 million and $175 million. Our 2020 first quarter
guidance is based upon, among other things, management’s assumptions for the anticipated volume of new executive search
confirmations and leadership consulting and culture shaping projects, the current backlog, consultant productivity, consultant
retention, the seasonality of our business and average currency rates from December 2019.

Our 2020 first quarter guidance is subject to a number of risks and uncertainties, including those disclosed under "Item 1A -
Risk Factors" and in this "Management’s Discussion and Analysis of Financial Condition and Results of Operations". As such,
actual results could vary from these projections.

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Results of Operations

The following table summarizes, for the periods indicated, the results of operations (in thousands, except per share data):

Year Ended December 31,

2019

2018

2017

Revenue

Revenue before reimbursements (net revenue)

706,924

716,023

Reimbursements

Total revenue

Operating Expenses

Salaries and benefits

General and administrative expenses

Impairment charges (1)

Restructuring charges (2)

Reimbursed expenses

Total operating expenses

Operating income (loss)

Non-operating income (expense)

Interest, net

Other, net

Net non-operating income (expense)

Income (loss) before taxes

Provision for income taxes

Net income (loss)

Basic weighted average common shares outstanding

Diluted weighted average common shares outstanding

Basic net income (loss) per common share

Diluted net income (loss) per common share

Cash dividends paid per share

18,690

725,614

501,791

137,492

—

4,130

18,690

662,103
63,511

2,880

2,898

5,778

69,289

22,420

19,632

735,655

506,349

140,817

—

19,632

666,798
68,857

1,141

494

1,635

70,492

21,197

46,869

49,295

19,103

19,551

2.45

2.40

0.60

18,917

19,532

2.61

2.52

0.52

621,400

18,656

640,056

434,219

147,316

50,722

15,666

18,656

666,579
(26,523)

385
(3,280)
(2,895)
(29,418)
19,217
(48,635)
18,735

18,735
(2.60)
(2.60)
0.52

(1) Includes impairment charges of $50.7 million related to Heidrick Consulting in 2017 (See Note 9, Goodwill and Other Intangible Assets).
(2) Includes restructuring charges of $4.1 million in 2019 and $15.7 million in 2017. The 2019 charges consist primarily of employee-
related costs associated with severance arrangements. The 2017 charges consist of $13.1 million of employee-related costs associated
with severance arrangements, $2.3 million in professional fees and other expenses and $0.3 million in real estate related expenses (See
Note 15, Restructuring).

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The following table summarizes, for the periods indicated, our results of operations as a percentage of revenue before

reimbursements (net revenue):

Revenue:

Revenue before reimbursements (net revenue)

Reimbursements

Total revenue
Operating expenses:

Salaries and benefits

General and administrative expenses

Impairment charges

Restructuring charges

Reimbursed expenses

Total operating expenses

Operating income (loss)

Non-operating income (expense)

Interest, net

Other, net

Net non-operating income (expense)

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

Year Ended December 31,

2019

2018

2017

100.0%

2.6

102.6

100.0%

2.7

102.7

100.0 %

3.0

103.0

71.0

19.4

—

0.6

2.6

93.7

9.0

0.4

0.8

9.8

3.2

70.7

19.7

—

2.7

93.1

9.6

0.2

0.1

0.2

9.8

3.0

69.9

23.7

8.2

2.5

3.0

107.3

(4.3)

0.1

(0.5)

(4.7)

3.1

6.6%

6.9%

(7.8)%

Note: Totals and subtotals may not equal the sum of individual line items due to rounding.

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We operate our Executive Search business in the Americas, Europe (which includes Africa) and Asia Pacific (which includes

the Middle East), and we operate our Heidrick Consulting business globally (See Note 18, Segment Information).

The following table sets forth, for the periods indicated, our revenue and operating income by segment (in thousands):

Year Ended December 31,

2019

2018

2017

Revenue:

Executive Search

Americas

Europe

Asia Pacific

Total Executive Search

Heidrick Consulting

Revenue before reimbursements (net revenue)

Reimbursements

Total revenue

Operating income (loss):

Executive Search

Americas (1)

Europe (2)

Asia Pacific (3)

Total Executive Search

Heidrick Consulting (4)

Total segments

Global Operations Support (5)

Total operating income (loss)

415,455

405,267

135,070

95,827

646,352

60,572

706,924

18,690

145,348

102,276

652,891

63,132

716,023

19,632

725,614

735,655

339,793

125,346

86,905

552,044

69,356

621,400

18,656

640,056

100,833

96,880

75,337

3,026

13,590

117,449
(18,499)
98,950
(35,439)
63,511

5,849

15,999

118,728
(13,619)
105,109
(36,252)
68,857

537

75,887
(62,368)
13,519
(40,042)
(26,523)

(1) Operating income for the Americas includes $4.1 million and $0.8 million of restructuring charges in 2019 and 2017, respectively.
(2) Operating income for Europe includes $4.0 million of restructuring charges in 2017.
(3) Operating income for Asia Pacific includes $2.0 million of restructuring charges in 2017.
(4) Operating loss for Heidrick Consulting includes less than $0.1 million of restructuring charges in 2019, and $50.7 million of impairment

charges and $3.4 million of restructuring charges in 2017.

(5) Operating loss for Global Operations Support includes less than $0.1 million and $5.5 million of restructuring charges in 2019 and 2017,

respectively.

Year ended December 31, 2019 compared to year ended December 31, 2018

Total revenue. Consolidated total revenue decreased $10.0 million, or 1.4%, to $725.6 million in 2019 from $735.7 million

in 2018. The decrease in total revenue was primarily due to the decrease in revenue before reimbursements (net revenue).

Revenue before reimbursements (net revenue). Consolidated net revenue decreased $9.1 million, or 1.3%, to $706.9 million
in 2019 from $716.0 million in 2018. Foreign exchange rates negatively impacted results by $11.3 million, or 1.6%. Executive
Search net revenue was $646.4 million in 2019, a decrease of $6.5 million compared to 2018. The decrease in Executive Search
net revenue was the result of declines in both Europe and Asia Pacific, partially offset by growth in the Americas. Heidrick
Consulting net revenue decreased $2.6 million, or 4.1%, to $60.6 million in 2019 from $63.1 million in 2018.

The number of Executive Search and Heidrick Consulting consultants was 380 and 71, respectively, as of December 31, 2019,
compared to 353 and 66, respectively, as of December 31, 2018. Specific to Executive Search, which is our largest business,
productivity as measured by annualized net Executive Search revenue per consultant was $1.7 million and $1.9 million for the
years ended December 31, 2019 and 2018, respectively. The number of confirmed searches decreased 4.6% compared to 2018.
The average revenue per executive search increased to $132,000 in 2019 compared to $127,300 in 2018.

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Salaries and benefits. Consolidated salaries and benefits expense decreased $4.6 million, or 0.9%, to $501.8 million in 2019
from $506.3 million in 2018. The decrease was due to lower variable compensation of $17.5 million, partially offset by higher
fixed compensation of $12.9 million. Variable compensation decreased due to lower consultant productivity compared to the prior
year. Included in variable compensation for the year ended December 31, 2019 is $0.6 million of contingent compensation for the
former owners of 2GET, which is based on the achievement of certain revenue and EBITDA milestones for the period from
acquisition through 2023. Fixed compensation increased due to the deferred compensation plan, stock compensation, base salaries
and payroll taxes, and retirement and benefits, partially offset by declines in talent acquisition and retention costs and separation.
Foreign exchange rate fluctuations positively impacted salaries and benefits expenses by $8.2 million, or 1.6%.

In 2019, we had an average of 1,680 employees, compared to an average of 1,610 employees in 2018.

As a percentage of net revenue, salaries and benefits expense was 71.0% in 2019 compared to 70.7% in 2018.

General and administrative expenses. Consolidated general and administrative expenses decreased $3.3 million, or 2.4%, to
$137.5 million in 2019 from $140.8 million in 2018. The decrease was primarily due to decreases in professional fees, intangible
amortization, resource library fees, and office occupancy expenses, partially offset by increases in bad debt, the use of external
third-party consultants, and taxes and licenses. Foreign exchange rate fluctuations positively impacted general and administrative
expenses by $2.1 million, or 1.5%.

As a percentage of net revenue, general and administrative expenses were 19.4% in 2019 compared to 19.7% in 2018.

Restructuring charges. The Company incurred approximately $4.1 million in restructuring charges during the year ended
December 31, 2019 in connection with initiatives to integrate the Company's legacy Brazil operations into the 2GET business
operation. The expenses are primarily employee-related including the elimination of duplicative positions in the Company's legacy
Brazil operations. There were no similar restructuring charges during the year ended December 31, 2018.

Operating income. Consolidated operating income was $63.5 million in 2019, including restructuring charges of $4.1 million,
compared to $68.9 million in 2018. Foreign exchange rate fluctuations negatively impacted operating income by $1.1 million or
1.6%. Excluding the impact of restructuring charges in 2019, operating income decreased $1.2 million from $68.9 million to $67.6
million.

Net non-operating income (expense). Net non-operating income was $5.8 million in 2019 compared to $1.6 million in 2018.

Net interest income was $2.9 million in 2019, a $1.7 million increase from $1.1 million in 2018. The increase was primarily

due to interest earned on marketable securities, which are primarily comprised of U.S. Treasury bills.

Other, net was income of $2.9 million in 2019 compared to $0.5 million in 2018. The increase was primarily the result of

gains on the deferred compensation plan assets.

Income taxes. See Note 16, Income Taxes.

Executive Search

Americas

The Americas segment reported net revenue of $415.5 million in 2019, an increase of 2.5% from $405.3 million in 2018. The
increase in net revenue was driven by an increase in average revenue per executive search. All industry practice groups contributed
to the increased net revenue with the exception of the Education and Social Enterprises, and Financial Services practice groups.
Foreign exchange fluctuations negatively impacted net revenue by $0.8 million, or 0.2%. There were 200 Executive Search
consultants in the Americas as of December 31, 2019, compared to 179 as of December 31, 2018.

Salaries and benefits expense decreased $0.1 million from 2018. Fixed compensation increased $14.8 million, primarily due
to base salaries and payroll taxes, the deferred compensation plan, stock compensation, and retirement and benefits, partially offset
by a decrease in talent acquisition and retention costs. Variable compensation decreased $14.9 million primarily due to the mix
of consultant productivity. Included in variable compensation for the year ended December 31, 2019 is $0.6 million of contingent
compensation for the former owners of 2GET, which is based on the achievement of certain revenue and EBITDA milestones for
the period from acquisition through 2023.

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General and administrative expenses increased $2.2 million, or 4.8%, from 2018 due to increases in bad debt, internal travel,
taxes and licenses, office occupancy expenses, and professional fees, partially offset by decreases in research tool expenses and
the use of external third-party consultants.

The Americas segment incurred approximately $4.1 million in restructuring charges during the year ended December 31,
2019 in connection with initiatives to integrate the Company's legacy Brazil operations into the 2GET business operation. The
expenses are primarily employee-related including the elimination of duplicative positions in the Company's legacy Brazil
operations. There were no similar restructuring charges during the year ended December 31, 2018.

Operating income was $100.8 million in 2019, an increase of $3.9 million, compared to $96.9 million in 2018. Excluding the
impact of restructuring charges in 2019, operating income increased $8.1 million from $96.9 million in 2018 to $104.9 million in
2019.

Europe

Europe reported net revenue of $135.1 million in 2019, a decrease of 7.1% from $145.3 million in 2018. The decrease in net
revenue was due to a 5.1% decrease in the number of executive search confirmations. All industry practice groups contributed to
the decline in revenue with the exception of the Global Technology and Services practice group. Foreign exchange rate fluctuations
negatively impacted net revenue by $6.8 million, or 4.8%. There were 107 Executive Search consultants in Europe as of
December 31, 2019, compared to 101 as of December 31, 2018.

Salaries and benefits expense decreased $4.2 million, or 4.0%, from 2018. Fixed compensation decreased $0.2 million,
primarily due to decreases in base salaries and payroll taxes and retirement and benefits, partially offset by increases in talent
acquisition and retention costs, and stock compensation. Variable compensation decreased $4.0 million due to a decline in consultant
productivity.

General and administrative expenses decreased $3.3 million, or 9.5% from 2018, primarily due to decreases in professional

fees, intangible amortization, internal travel, and office occupancy expenses.

The Europe segment reported operating income of $3.0 million in 2019 compared to $5.8 million in 2018.

Asia Pacific

Asia Pacific reported net revenue of $95.8 million in 2019, a decrease of 6.3% compared to $102.3 million in 2018. The
decrease in net revenue was due to a 12.3% decrease in the number of executive search confirmations, partially offset by an increase
in average revenue per executive search. All industry practice groups contributed to the decline in revenue with the exception of
the Global Technology and Services practice group. Foreign exchange rate fluctuations negatively impacted net revenue by $2.7
million, or 2.7%. There were 73 Executive Search consultants in Asia Pacific as of both December 31, 2019 and 2018.

Salaries and benefits expense decreased $3.3 million, or 5.0%, from 2018. Fixed compensation decreased $3.7 million due
to decreases in base salaries and payroll taxes, and talent acquisition and retention costs, partially offset by increases in retirement
and benefits, and stock compensation. Variable compensation increased $0.4 million due to the mix of consultant productivity.

General and administrative expenses decreased $0.7 million, or 3.5%, from 2018 primarily due to a decrease in office occupancy

expenses, partially offset by increases in bad debt and internal travel.

The Asia Pacific segment reported operating income of $13.6 million in 2019, a decrease of $2.4 million compared to $16.0

million in 2018.

Heidrick Consulting

The Heidrick Consulting segment reported net revenue of $60.6 million in 2019, a decrease of 4.1% compared to $63.1 million
in 2018. The decrease in net revenue was due to a decrease in revenue per consulting engagement. Foreign exchange rate fluctuations
negatively impacted results by $1.1 million, or 1.7%. There were 71 Heidrick Consulting consultants as of December 31, 2019,
compared to 66 as of December 31, 2018.

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Salaries and benefits expense increased $4.0 million, or 7.5%, from 2018. Fixed compensation increased $1.8 million, primarily
due to increases in base salaries and payroll taxes, and retirement and benefits, partially offset by a decrease in talent acquisition
and retention costs. Variable compensation increased $2.2 million due to cross collaboration bonuses.

General and administrative expenses decreased $1.7 million, or 7.0%, from 2018, primarily due to decreases in professional
fees, information technology, and earnout accretion, partially offset by increases in the use of external third-party consultants and
internal travel.

The Heidrick Consulting segment reported an operating loss of $18.5 million in 2019, an increase of $4.9 million compared

to an operating loss of $13.6 million in 2018.

Global Operations Support

Global Operations Support expenses decreased $0.8 million, or 2.3%, to $35.4 million from $36.3 million in 2018.

Salaries and benefits expenses decreased $0.9 million, or 4.4%, due to decreases in management bonuses, separation, and

stock compensation, partially offset by increases in base salaries and payroll taxes and retirement and benefits.

General and administrative expenses increased $0.1 million due to increases in information technology, the use of external
third-party consultants, and taxes and licenses, partially offset by decreases in internal travel, professional fees, and office occupancy
expenses.

Global Operations Support incurred less than $0.1 million in restructuring charges during the year ended December 31, 2019.

There were no similar restructuring charges during the year ended December 31, 2018.

Liquidity and Capital Resources

General. We continually evaluate our liquidity requirements, capital needs and availability of capital resources based on our
operating needs. We believe that our available cash balances together with the funds expected to be generated from operations
and funds available under our committed revolving credit facility will be sufficient to finance our operations for the foreseeable
future, as well as to finance the cash payments associated with our cash dividends and stock repurchase program.

We pay the non-deferred portion of annual bonuses in the first quarter following the year in which they are earned. Employee

bonuses are accrued throughout the year and are based on our performance and the performance of the individual employee.

Lines of Credit. On October 26, 2018, we entered into a new Credit Agreement (the "2018 Credit Agreement") to replace the
Second Amended and Restated Credit Agreement (the "Restated Credit Agreement") executed on June 30, 2015. The 2018 Credit
Agreement provides us with a senior unsecured revolving line of credit with an aggregate commitment of $175 million, which
includes a sublimit of $25 million for letters of credit, and a $10 million swingline loan sublimit. The agreement also includes a
$75 million expansion feature. The 2018 Credit Agreement will mature in October 2023. Borrowings under the 2018 Credit
Agreement bear interest at our election of the Alternate Base Rate (as defined in the 2018 Credit Agreement) or Adjusted LIBOR
(as defined in the 2018 Credit Agreement) plus a spread as determined by our leverage ratio.

Borrowings under the 2018 Credit Agreement may be used for working capital, capital expenditures, Permitted Acquisitions
(as defined in the 2018 Credit Agreement) and for other general purposes. The obligations under the 2018 Credit Agreement are
guaranteed by certain of our subsidiaries.

We capitalized approximately $1.0 million of loan acquisition costs related to the 2018 Credit Agreement, which will be

amortized over the remaining term of the agreement.

Before October 26, 2018, we were party to the Restated Credit Agreement. The Restated Credit Agreement provided a single
senior unsecured revolving line of credit with an aggregate commitment of up to $100 million, which included a sublimit of $25
million for letters of credit, and a $50 million expansion feature. Borrowings under the Restated Credit Agreement bore interest
at our election of the existing Alternate Base Rate (as defined in the Restated Credit Agreement) or the Adjusted LIBOR Rate (as
defined in the Restated Credit Agreement) plus a spread as determined by our leverage ratio.

During the three months ended March 31, 2018, we borrowed $20 million under the Restated Credit Agreement and elected
the Adjusted LIBOR Rate. We subsequently repaid $8 million during the three months ended March 31, 2018 and $12 million
during the three months ended June 30, 2018.

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As of December 31, 2019, and 2018, we had no outstanding borrowings under the 2018 Credit Agreement and were in

compliance with the financial and other covenants under the 2018 Credit Agreement and no event of default existed.

Cash, cash equivalents, and marketable securities. Cash, cash equivalents and marketable securities at December 31, 2019
were $332.9 million, an increase of $53.0 million compared to $279.9 million at December 31, 2018. The $332.9 million of cash,
cash equivalents, and marketable securities at December 31, 2019 includes $131.6 million held by our foreign subsidiaries. The
foreign cash balance of $131.6 million is considered permanently reinvested in these foreign subsidiaries. If these funds were
required to satisfy obligations in the United States, the repatriation of these funds could cause us to incur additional foreign
withholding taxes. We expect to pay approximately $205.0 million in variable compensation related to 2019 performance in March
and April 2020. In January 2020, we paid approximately $17.1 million in variable compensation that was deferred in prior years.

Cash flows provided by operating activities. For the year ended December 31, 2019, cash provided by operating activities
was $78.6 million, primarily reflecting net income net of non-cash charges of $69.2 million, a decrease in accounts receivable of
$6.9 million, an increase in net retirement and pension plan liabilities of $3.3 million and an increase in accrued expenses of $2.4
million. The increase in accrued expenses primarily reflects approximately $205.0 million of current year bonus accruals, partially
offset by $202.0 million of bonus payments for 2018 made in early 2019.

Cash provided by operating activities for the year ended December 31, 2018, was $102.9 million, primarily reflecting net
income net of non-cash charges of $68.6 million, an increase in accrued expenses of $71.5 million, partially offset by an increase
in accounts receivable of $16.8 million and restructuring payments of $11.6 million. The increase in accrued expenses primarily
reflects approximately $202.0 million of bonus accruals, partially offset by $148.0 million of bonus payments for 2017 made in
early 2018.

Cash flows used in investing activities. For the year ended December 31, 2019, cash used in investing activities was $69.3
million, primarily due to purchases of marketable securities and investments of $130.4 million, the acquisition of 2GET for $3.5
million, and capital expenditures of $3.4 million, partially offset by proceeds from the maturity and sales of marketable securities
and investments of $68.0 million. The decrease in capital expenditures is primarily the result of reduced office build-outs.

Cash used in investing activities for the year ended December 31, 2018, was $8.2 million, primarily due to capital expenditures
of $6.0 million, the acquisition in January 2018 of Amrop A/S ("Amrop") for $3.1 million and purchases of available for sale
securities of $2.2 million, partially offset by proceeds from the sale of available for sale securities of $3.0 million. The increase
in capital expenditures is primarily the result of office build-outs and a global information technology update.

Cash flows used in financing activities. For the year ended December 31, 2019, cash used in financing activities was $18.2
million, primarily due to cash dividend payments of $11.8 million, payment of employee tax withholdings on equity transactions
of $4.6 million, and earnout payments related to the Scambler MacGregor and DSI acquisitions of $1.9 million.

Cash used in financing activities for the year ended December 31, 2018, was $17.0 million due to cash dividend payments
of $10.2 million, earnout payments related to the JCA Group acquisition of $3.6 million and the payment of employee tax
withholdings on equity transactions of $2.2 million. Gross proceeds and payments on the Company's line of credit were each $20.0
million during the year ended December 31, 2018.

On February 11, 2008, we announced that our Board of Directors authorized management to repurchase shares of our common
stock with an aggregate total amount up to $50 million. We may from time to time and as business conditions warrant purchase
shares of our common stock on the open market or in negotiated or block trades. No time limit has been set for completion of this
program. We did not repurchase any shares of our common stock in 2019. The most recent purchase of shares of common stock
occurred during the year ended December 31, 2012. As of December 31, 2019, we have purchased 1,038,670 shares of our common
stock for a total of $28.3 million and $21.7 million remains available for future purchases under the authorization. Unless terminated
or extended earlier by resolution of the Board of Directors, the program will expire when the amount authorized for repurchases
has been spent.

Off-balance sheet arrangements. We do not have material off-balance sheet arrangements, special purpose entities, trading

activities of non-exchange traded contracts or transactions with related parties.

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Contractual obligations. The following table presents our known contractual obligations as of December 31, 2019, and the

expected timing of cash payments related to these contractual obligations (in millions):

2020

2021

2022

2023

2024

Thereafter

Total

Payments due for the years ended December 31,

Contractual obligations:
Operating lease obligations

Asset retirement obligations (1)

Total

30.2

0.6

30.8

27.2

0.9

28.1

23.6

0.1

23.7

20.6

0.5

21.1

10.0

0.8

10.8

9.0

0.1

9.1

120.6

3.0

123.6

(1) Represents the fair value of the obligation associated with the retirement of tangible long-lived assets primarily related to our
obligation at the end of the lease term to return office space to the landlord in its original condition.

In addition to the contractual obligations included in the above table, we have liabilities related to certain employee benefit
plans. These liabilities are recorded in our Consolidated Balance Sheet at December 31, 2019. The obligations related to these
employee benefit plans are described in Note 12, Employee Benefit Plans, and Note 13, Pension Plan and Life Insurance Contract,
in the Notes to Consolidated Financial Statements. As the timing of cash disbursements related to these employee benefit plans
is uncertain, we have not included these obligations in the above table. The table excludes our liability for uncertain tax positions
including accrued interest and penalties, which totaled $0.2 million as of December 31, 2019, since we cannot predict with
reasonable reliability the timing of cash settlements to the respective taxing authorities.

Application of Critical Accounting Policies and Estimates

General. Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our
Consolidated Financial Statements, which have been prepared using accounting principles generally accepted in the United States
of America. Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies and Note 3,
Revenue, in the Notes to Consolidated Financial Statements. The preparation of these financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure
of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions. If actual amounts are ultimately different from previous estimates, the revisions are included
in our results of operations for the period in which the actual amounts become known.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about
matters that are highly uncertain at the time the estimate is made, there are different estimates that reasonably could have been
used, or if changes in the accounting estimates are reasonably likely to occur periodically, that could materially impact the financial
statements. Management believes the following critical accounting policies reflect its more significant estimates and assumptions
used in the preparation of the Consolidated Financial Statements.

Revenue recognition. In our Executive Search segment, revenue is recognized as we satisfy our performance obligations by
transferring a good or service to a client. Generally, each of our executive search contracts contain one performance obligation
which is the process of identifying potentially qualified candidates for a specific client position. In most contracts, the transaction
price includes both fixed and variable consideration. Fixed compensation is comprised of a retainer, equal to approximately one-
third of the estimated first year compensation for the position to be filled, and indirect expenses, equal to a specified percentage
of the retainer, as defined in the contract. The Company generally bills its clients for its retainer and indirect expenses in one-third
increments over a three-month period commencing in the month of a client’s acceptance of the contract. If actual compensation
of a placed candidate exceeds the original compensation estimate, the Company is often authorized to bill the client for one-third
of the excess compensation. The Company refers to this additional billing as uptick revenue. In most contracts, variable
consideration is comprised of uptick revenue and direct expenses. The Company bills its clients for uptick revenue upon completion
of the executive search, and direct expenses are billed as incurred.

As required under Accounting Standards Update ("ASU") No. 2014-09, the Company estimates uptick revenue at contract
inception, based on a portfolio approach, utilizing the expected value method based on a historical analysis of uptick revenue
realized in the Company’s geographic regions and industry practices, and initially records a contract’s uptick revenue in an amount
that is probable not to result in a significant reversal of cumulative revenue recognized when the actual amount of uptick revenue
for that contract is known. Differences between the estimated and actual amounts of variable consideration are recorded when

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known. The Company does not estimate revenue for direct expenses as it is not materially different than recognizing revenue as
direct expenses are incurred.

Revenue from our executive search engagement performance obligation is recognized over time as our clients simultaneously
receive and consume the benefits provided by the Company's performance. Revenue from executive search engagements is
recognized over the expected average period of performance, in proportion to the estimated personnel time incurred to fulfill our
obligations under the executive search contract. Revenue is generally recognized over a period of approximately six months.

Our executive search contracts contain a replacement guarantee which provides for an additional search to be completed, free
of charge except for expense reimbursements, should the candidate presented by the Company be hired by the client and
subsequently terminated by the client for performance reasons within a specified period of time. The replacement guarantee is an
assurance warranty, which is not a performance obligation under the terms of the executive search contract, as the Company does
not provide any services under the terms of the guarantee that transfer benefits to the client in excess of assuring that the identified
candidate complies with the agreed-upon specifications. The Company accounts for the replacement guarantee under the relevant
warranty guidance in ASC 460 - Guarantees.

In our Heidrick Consulting segment, revenue is recognized as we satisfy our performance obligations by transferring a good
or service to a client. Heidrick Consulting enters into contracts with clients that outline the general terms and conditions of the
assignment to provide succession planning, executive assessment, top team and board effectiveness and culture shaping programs.
The consideration the Company expects to receive under each contract is generally fixed. Most of our consulting contracts contain
one performance obligation, which is the overall process of providing the consulting service requested by the client. The majority
of our consulting revenue is recognized over time utilizing both input and output methods. Contracts that contain coaching sessions,
training sessions or the completion of assessments are recognized using the output method as each session or assessment is delivered
to the client. Contracts that contain general consulting work are recognized using the input method utilizing a measure of progress
that is based on time incurred on the project.

The Company enters into enterprise agreements with clients to provide a license for online access, via the Company's Culture
Connect platform, to training and other proprietary material related to the Company's culture shaping programs. The consideration
the Company expects to receive under the terms of an enterprise agreement is comprised of a single fixed fee. Our enterprise
agreements contain multiple performance obligations, the delivery of materials via Culture Connect and material rights related to
options to renew enterprise agreements at a significant discount. The Company allocates the transaction price to the performance
obligations in the contract on a stand-alone selling price basis. The stand-alone selling price for the initial term of the enterprise
agreement is outlined in the contract and is equal to the price paid by the client for the agreement over the initial term of the
contract. The stand-alone selling price for the options to renew, or material right, are not directly observable and must be estimated.
This estimate is required to reflect the discount the client would obtain when exercising the option to renew, adjusted for the
likelihood that the option will be exercised. The Company estimates the likelihood of renewal using a historical analysis of client
renewals. Access to Culture Connect represents a right to access the Company’s intellectual property that the client simultaneously
receives and consumes as the Company performs under the agreement, and therefore the Company recognizes revenue over time.
Given the continuous nature of this commitment, the Company utilizes straight-line ratable revenue recognition over the estimated
subscription period as the Company's clients will receive and consume the benefits from Culture Connect equally throughout the
contract period. Revenue related to client renewals of enterprise agreements is recognized over the term of the renewal, which is
generally twelve months. Enterprise agreements do not comprise a significant portion of the Company's revenue.

Each of the Company's contracts has an expected duration of one year or less. Accordingly, the Company has elected to utilize
the available practical expedient related to the disclosure of the transaction price allocated to the remaining performance obligations
under its contracts. The Company has also elected the available practical expedients related to adjusting for the effects of a
significant financing component and the capitalization of contract acquisition costs. The Company charges and collects from its
clients, sales tax and value added taxes as required by certain jurisdictions. The Company has made an accounting policy election
to exclude these items from the transaction price in its contracts.

Income taxes. Determining the consolidated provision for income tax expense, income tax liabilities and deferred tax assets
and liabilities involves judgment. As a global company, we calculate and provide for income taxes in each of the tax jurisdictions
in which we operate. This involves estimating current tax exposures in each jurisdiction as well as making judgments regarding
the recoverability of deferred tax assets. Tax exposures can involve complex issues and may require an extended period to resolve.
Changes in the geographic mix or estimated level of annual income before taxes can affect the overall effective tax rate.

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potential sources of taxable income including scheduled reversals of deferred tax liabilities, tax-planning strategies, projected
future taxable income and recent financial performance.

Deferred taxes have been recorded for U.S. income taxes and foreign withholding taxes related to undistributed foreign
earnings that are not permanently reinvested. Annually, we assess material changes in estimates of cash, working capital and long-
term investment requirements in order to determine whether these earnings should be distributed. If so, an additional provision
for taxes may apply, which could materially affect our future effective tax rate.

Goodwill and other intangible assets. We review goodwill for impairment annually. We also review goodwill and long-lived
assets, including identifiable intangible assets, for impairment whenever events or changes in circumstances indicate that it is
more-likely-than-not that the fair value has fallen below the carrying amount of an asset. We review factors such as a significant
change in business climate, attrition of key personnel, changes in financial condition or results of operations, a prolonged decline
in our stock price and market capitalization, competition, and other factors to determine if an impairment test is necessary. Our
annual impairment test begins with a qualitative assessment to determine whether it is necessary to perform a fair value-based
goodwill impairment test. The qualitative assessment includes evaluating whether events and circumstances indicate that it is
more-likely-than-not that fair values of reporting units are greater than the carrying values. If the qualitative factors do not indicate
that it is more-likely-than-not that the fair values of the reporting units are greater than the carrying values, then we perform the
fair value test.

The Company operates four reporting units: Americas, Europe (which includes Africa), Asia Pacific (which includes the
Middle East) and Heidrick Consulting. The goodwill impairment test is completed by comparing the fair value of a reporting unit
with its carrying amount. The fair value of each of the Company’s reporting units is determined using a discounted cash flow
methodology. The discounted cash flow approach is dependent on a number of factors including estimates of future market growth
and trends, forecasted revenue and costs, capital investments, appropriate discount rates, certain assumptions to allocate shared
costs, assets and liabilities, historical and projected performance of our reporting units, the outlook for the executive search industry
and the macroeconomic conditions affecting each of our reporting units. We base our fair value estimates on assumptions we
believe to be reasonable, but which are unpredictable and inherently uncertain. The fair value of our reporting units is also impacted
by our overall market capitalization and may be impacted by volatility in our stock price and assumed control premium, among
other factors. As a result, actual future results may differ from those estimates and may result in a future impairment charge. These
assumptions are updated annually, at a minimum, to reflect information concerning our reportable segments. The Company
continues to monitor potential triggering events including changes in the business climate in which it operates, the Company’s
market capitalization compared to its book value, and the Company’s recent operating performance. Any changes in these factors
could result in an impairment charge. An impairment charge is recognized for the amount by which the carrying value of a reporting
unit exceeds its carrying amount; however, the loss recognized is not to exceed the total amount of goodwill allocated to that
reporting unit.

Additionally, we review long-lived assets, such as property, equipment, and purchased intangibles subject to amortization for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted
future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows,
an impairment charge, equal to the amount by which the carrying amount of the asset exceeds the fair value of the asset, is
recognized.

We believe that the accounting estimate related to goodwill and other intangible asset impairment is a critical accounting
estimate because the assumptions used are highly susceptible to changes in the operating results and cash flows of our reportable
segments.

Recently Adopted Financial Accounting Standards

On January 1, 2019, we adopted Accounting Standards Update ("ASU") No. 2016-02, Leases, ASU No. 2018-10, Codification
Improvements to Topic 842 (Leases) and ASU No. 2018-11, Targeted Improvements to Topic 842 (Leases). The guidance is
intended to increase transparency and comparability among companies for leasing transactions, including a requirement for
companies that lease assets to recognize on their balance sheets the assets and liabilities for the rights and obligations created by
those leases. The guidance also provides for disclosures that allow the users of financial statements to assess the amount, timing,
and uncertainty of cash flows arising from leases.

We adopted the guidance using the modified retrospective method without restatement of comparative periods. As such,
periods prior to the date of adoption are presented in accordance with ASC 840 - Leases. We utilized the available practical
expedient that allowed for companies to not reassess whether existing contracts contain a lease under the new definition of a lease,
28

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lease classification for existing leases and whether previously capitalized initial direct costs would qualify for capitalization under
the new guidance.

The adoption of this guidance had a material impact on the Condensed Consolidated Balance Sheet as of December 31, 2019
due to the recognition of equal right-of-use assets and lease liabilities for our portfolio of operating leases. The right-of-use asset
balance was then adjusted by the reclassification of pre-existing prepaid and accrued rent balances from other line items within
the Condensed Consolidated Balance Sheet. The adoption had an immaterial impact on the Condensed Consolidated Statement
of Comprehensive Income and Condensed Consolidated Statement of Cash Flows for the year ended December 31, 2019. The
adoption had no impact on the Condensed Consolidated Statement of Changes in Stockholders' Equity for the year ended December
31, 2019.

Additional information and disclosures required by the new standard are contained in Note 6, Leases.

On January 1, 2019, we adopted ASU No. 2018-02, Income Statement - Reporting Comprehensive Income, which is intended
to improve the usefulness of information reported as a result of the Tax Cuts and Jobs Act. The new guidance allows a reclassification
from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs
Act. The adoption of this guidance did not have an impact on our consolidated financial statements for the year ended December
31, 2019.

Recent Financial Accounting Standards

In December 2019, the Financial Accounting Standards Board ("FASB"), issued ASU No. 2019-12, Simplifying the Accounting
for Income Taxes. The guidance simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in
Accounting Standards Codification ("ASC") 740 related to the approach for intraperiod tax allocation, the methodology for
calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The
guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the
accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance is effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted. The Company is currently
evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The guidance
amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit
losses on certain types of financial instruments, including trade receivables. The standard is effective for fiscal years beginning
after December 15, 2019. The Company will adopt this guidance in its fiscal year beginning January 1, 2020. The adoption of
this guidance is not anticipated to have a material impact on our consolidated financial statements.

Quarterly Financial Information (Unaudited)

The following table sets forth certain financial information for each quarter of 2019 and 2018. The information is derived
from our quarterly consolidated financial statements which are unaudited but which, in the opinion of management, have been
prepared on the same basis as the audited annual consolidated financial statements included in this document. The consolidated
financial data shown below should be read in conjunction with the consolidated financial statements and notes thereto. The operating
results for any quarter are not necessarily indicative of results for any future period.

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2019

2018

Quarter Ended

Mar. 31

Jun. 30

Sept. 30

Dec. 31

Mar. 31

Jun. 30

Sept. 30

Dec. 31

Revenue before
reimbursements (net
revenue)

Operating income (1)

Income before income taxes

Provision for income taxes

$ 171,594

$ 173,122

$ 182,174

$ 180,034

$ 160,071

$ 183,059

$ 187,588

$ 185,305

16,391

18,842

6,755

18,353

19,473

5,193

14,472

14,827

4,880

14,295

16,147

5,592

13,121

12,912

2,744

18,461

18,411

6,948

20,583

23,187

6,718

16,692

15,982

4,787

Net income

$ 12,087

$ 14,280

Basic earnings per common
share

Diluted earnings per
common share

Cash dividends paid per
share

0.64

0.62

0.15

0.75

0.73

0.15

9,947

$ 10,555

$ 10,168

$ 11,463

$ 16,469

$ 11,195

0.52

0.51

0.15

0.55

0.54

0.15

0.54

0.53

0.13

0.61

0.59

0.13

0.87

0.85

0.13

0.59

0.58

0.13

(1) Includes $4.1 million of restructuring charges for the three months ended September 30, 2019.

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ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency market risk. With our operations in the Americas, Europe and Asia Pacific, we conduct business using various
currencies. Revenue earned in each country is generally matched with the associated expenses incurred, thereby reducing currency
risk to earnings. A 10% change in the average exchange rate for currencies of all foreign countries in which we operate would
have increased or decreased our 2019 net income by approximately $0.9 million. However, because certain assets and liabilities
are denominated in currencies other than their respective functional currency, changes in currency rates may cause fluctuations
in the valuation of such assets and liabilities. Based on balances exposed to fluctuation in exchange rates as of December 31, 2019,
a 10% increase or decrease equally in the value of currencies could result in a foreign exchange gain or loss of approximately $1.4
million. In addition, as the local currency of our subsidiaries has generally been designated as the functional currency, we are
affected by the translation of foreign currency financial statements into U.S. dollars. For financial information by segment, see
Note 18, Segment Information, in the Notes to Consolidated Financial Statements.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December 31, 2019, 2018 and 2017

Consolidated Statements of Cash Flows For the Years Ended December 31, 2019, 2018 and 2017

Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2019, 2018 and 2017

Notes to Consolidated Financial Statements

PAGE

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors
Heidrick & Struggles International, Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Heidrick & Struggles International, Inc. (the Company) as of
December 31, 2019 and 2018, the related consolidated statements of comprehensive income (loss), changes in stockholders' equity
and cash flows for each of the two years in the period ended December 31, 2019, and the related notes to the consolidated financial
statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the
United States of America.

in accordance with

the Public Company Accounting Oversight Board
We have also audited,
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria
established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission in 2013, and our report dated February 24, 2020 expressed an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.

the standards of

Lease Accounting
As discussed in Note 6 to the financial statements, the Company has changed its method of accounting for leases in 2019 due to
the adoption of ASC 842 - Leases.

Segment Reporting
As discussed in Note 18 to the financial statements, the Company changed the composition of its segment information in 2018.
We audited the adjustments necessary to restate the 2017 segment information provided in Note 18. In our opinion, such adjustments
are appropriate and have been properly applied.

Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ RSM US LLP

We have served as the Company's auditor since 2018

Chicago, Illinois
February 24, 2020

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors
Heidrick & Struggles International, Inc.

Opinion on the Internal Control Over Financial Reporting
We have audited Heidrick & Struggles International, Inc.'s (the Company) internal control over financial reporting as of December
31, 2019, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets as of December 31, 2019 and 2018, and the related consolidated statements of
comprehensive income (loss), changes in stockholders' equity and cash flows of the Company for each of the two years in the
period ended December 31, 2019, and our report dated February 24, 2020 expressed an unqualified opinion.

Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Chicago, Illinois
February 24, 2020

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Heidrick & Struggles International, Inc.:

Opinion on the Consolidated Financial Statements
We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 18, the
consolidated statements of comprehensive loss, changes in stockholders’ equity, and cash flows of Heidrick & Struggles
International, Inc. and subsidiaries (the Company) for the year ended December 31, 2017, and the related notes (collectively, the
consolidated financial statements). The 2017 consolidated financial statements before the effects of the adjustments described in
Note 18 are not presented herein. In our opinion, the consolidated financial statements, before the effects of the adjustments to
retrospectively apply the change in accounting described in Note 18, present fairly, in all material respects, the results of operations
of the Company and its cash flows for the year ended December 31, 2017, in conformity with U.S. generally accepted accounting
principles.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting
described in Note 18 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments
are appropriate and have been properly applied. Those adjustments were audited by other auditors.

Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ KPMG LLP

We served as the Company’s auditor from 2002 to 2018.

Chicago, Illinois
March 13, 2018

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

Current assets:

Cash and cash equivalents
Marketable securities
Accounts receivable, net
Prepaid expenses
Other current assets
Income taxes recoverable

Total current assets

Non-current assets:

Property and equipment, net
Operating lease right-of-use assets
Assets designated for retirement and pension plans
Investments
Other non-current assets
Goodwill
Other intangible assets, net
Deferred income taxes, net
Total non-current assets

Total assets
Current liabilities:
Accounts payable
Accrued salaries and benefits
Deferred revenue
Operating lease liabilities
Other current liabilities
Income taxes payable

Total current liabilities

Non-current liabilities:

Accrued salaries and benefits
Retirement and pension plans
Operating lease liabilities
Other non-current liabilities
Total non-current liabilities

Total liabilities
Commitments and contingencies (Note 20)
Stockholders’ equity:

Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued at
December 31, 2019 and December 31, 2018
Common stock, $0.01 par value, 100,000,000 shares authorized, 19,585,777 shares
issued, 19,165,954 and 18,954,275 shares outstanding at December 31, 2019 and
December 31, 2018, respectively
Treasury stock at cost, 419,823 and 631,502 shares at December 31, 2019 and
December 31, 2018, respectively
Additional paid in capital
Retained earnings
Accumulated other comprehensive income

Total stockholders’ equity

Total liabilities and stockholders’ equity

December 31,
2019

December 31,
2018

271,719
61,153
109,163
20,185
27,848
4,414
494,482

28,650
99,391
13,978
25,409
20,434
126,831
1,935
33,063
349,691
844,173

8,633
234,306
41,267
30,955
26,253
3,928
345,342

59,662
46,032
79,388
4,634
189,716
535,058

—

196

(14,795)
228,807
91,083
3,824
309,115
844,173

279,906
—
114,977
22,766
29,598
3,620
450,867

33,871
—
15,035
19,442
22,276
122,092
2,216
34,830
249,762
700,629

9,166
227,653
40,673
—
33,219
8,240
318,951

57,234
39,865
—
17,423
114,522
433,473

—

196

(20,298)
227,147
56,049
4,062
267,156
700,629

The accompanying notes to Consolidated Financial Statements are an integral part of these statements.

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)

Revenue:

Revenue before reimbursements (net revenue)

Reimbursements

Total revenue
Operating expenses:

Salaries and benefits

General and administrative expenses

Impairment charges

Restructuring charges

Reimbursed expenses

Total operating expenses

Operating income (loss)
Non-operating income (expense):

Interest, net

Other, net

Net non-operating income (expense)

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment

Net unrealized gain on available-for-sale investments

Pension gain (loss) adjustment

Other comprehensive income (loss), net of tax

Comprehensive income (loss)

Basic weighted average common shares outstanding

Diluted weighted average common shares outstanding

Basic net income (loss) per common share

Diluted net income (loss) per common share

Cash dividends paid per share

December 31,

2019

2018

2017

$ 706,924

$ 716,023

$ 621,400

18,690

19,632

18,656

725,614

735,655

640,056

501,791

137,492

—

4,130

18,690

506,349

140,817

—

19,632

662,103

666,798

63,511

68,857

2,880

2,898

5,778

69,289

22,420

46,869

1,141

494

1,635

70,492

21,197

49,295

434,219

147,316

50,722

15,666

18,656

666,579
(26,523)

385
(3,280)
(2,895)
(29,418)
19,217
(48,635)

844

13
(1,095)
(238)
$ 46,631

(3,885)
—

721
(3,164)
$ 46,131

6,853

2,660

480

9,993
$ (38,642)

19,103

19,551

18,917

19,532

18,735

2.45

2.40

0.60

2.61

2.52

0.52

(2.60)
(2.60)
0.52

The accompanying notes to Consolidated Financial Statements are an integral part of these statements.

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Cash flows - operating activities:

Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:

Depreciation and amortization
Deferred income taxes
Stock-based compensation expense
Accretion expense related to earnout payments
Impairment charges
Gain on marketable securities
Changes in assets and liabilities, net of effects of acquisitions:

Accounts receivable
Accounts payable
Accrued expenses
Restructuring accrual
Deferred revenue
Income taxes (payable) recoverable, net
Retirement and pension plan assets and liabilities
Prepaid expenses
Other assets and liabilities, net

Net cash provided by operating activities

Cash flows - investing activities:

Acquisition of businesses, net of cash acquired
Capital expenditures
Purchases of available for sale investments
Proceeds from sale of available for sale investments
Net cash used in investing activities

Cash flows - financing activities:
Proceeds from line of credit
Payments on line of credit
Debt issuance costs
Cash dividends paid
Payment of employee tax withholdings on equity transactions
Acquisition earnout payments

Net cash used in financing activities

Effect of exchange rates fluctuations on cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period

Supplemental disclosures of cash flow information

Cash paid for

Income taxes
Interest

Year Ended December 31,

2019

2018

2017

$ 46,869

$ 49,295

$ (48,635)

10,371
1,644
10,298
668
—
(595)

6,899
(994)
2,441
1,959
175
(5,450)
3,258
(455)
1,557
78,645

12,522
(3,496)
8,947
1,285
—
—

(16,759)
(526)
71,526
(11,617)
(1,899)
757
(1,492)
(893)
(4,748)
102,902

14,774
(1,690)
4,935
1,038
50,722
—

(1,882)
1,474
18,330
13,025
2,010
3,381
3,065
797
5,626
66,970

(3,520)
(3,352)
(130,411)
67,968
(69,315)

(3,083)
(5,960)
(2,201)
2,995
(8,249)

(364)
(14,022)
(2,269)
1,404
(15,251)

20,000
—
— (20,000)
(981)
—
(10,181)
(11,835)
(2,234)
(4,552)
(3,592)
(1,853)
(16,988)
(18,240)
(5,565)
367
(8,543)
72,100
208,162
280,262
$ 280,262
$ 271,719

40,000
(40,000)
—
(10,111)
(2,392)
(4,557)
(17,060)
7,933
42,592
165,570
$ 208,162

$ 27,338
$

— $

$ 22,616
67

$ 14,814
193
$

The accompanying notes to Consolidated Financial Statements are an integral part of these statements.

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)

Common Stock

Treasury Stock

Amount

Additional
Paid in
Capital

Retained
Earnings
(Deficit)

Accumulated
Other
Comprehensive
Income

Total

1,008

$ (32,915) $ 229,957

$ 58,030

3,322

$ 258,590

— (48,635)

—

(48,635)

Balance at December 31, 2016
Net loss

Other comprehensive income, net
of tax

Treasury and common stock
transactions:

Stock-based compensation

Vesting of equity, net of tax
withholdings

Re-issuance of treasury stock

Cash dividends declared
($0.52 per share)

Dividend equivalents on
restricted stock units

Balance at December 31, 2017
Net income

Adoption of accounting standards

Other comprehensive loss, net of
tax

Treasury and common stock
transactions:

Stock-based compensation

Vesting of equity, net of tax
withholdings

Re-issuance of treasury stock

Cash dividends declared
($0.39 per share)

Dividend equivalents on restricted
stock units

19,586

—

19,586

—

Balance at December 31, 2018

19,586

Net income

Other comprehensive loss, net of
tax

Treasury and common stock
transactions:

Stock-based compensation

Vesting of equity, net of tax
withholdings

Re-issuance of treasury stock

Cash dividends declared
($0.60 per share)

Dividend equivalents on restricted
stock units

—

Balance at December 31, 2019

19,586

196

—

196

—

196

—

196

—

4,935

(188)

(15)

6,311

508

(8,716)

(170)

—

805

—

(26,096)

226,006

—

8,947

(167)

(6)

5,604

194

(7,837)

—

(20,298)

227,147

—

632

—

10,298

(163)

(49)

5,154

349

(9,706)

1,068

—

(9,762)

(349)

(716)

49,295

15,043

—

(7,389)

(184)

56,049

46,869

—

9,993

—

4,935

(2,405)

338

(9,762)

(349)

13,315

212,705

—

(6,089)

49,295

8,954

(3,164)

—

8,947

(2,233)

225

(7,389)

(184)

4,062

267,156

—

46,869

(238)

—

10,298

(4,552)

1,417

(11,461)

(374)

—

— (11,461)

—

(374)

420

$ (14,795) $ 228,807

$ 91,083

3,824

$ 309,115

The accompanying notes to Consolidated Financial Statements are an integral part of these statements.

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tables in thousands, except share and per share figures)

1. Basis of Presentation

Heidrick & Struggles International, Inc. and subsidiaries (the “Company”) is engaged in providing executive search and

consulting services to clients on a retained basis. The Company operates in the Americas, Europe and Asia Pacific regions.

The consolidated financial statements include Heidrick & Struggles International, Inc. and its wholly owned subsidiaries and
have been prepared using accounting principles generally accepted in the United States of America (“GAAP”). The preparation
of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. Significant items subject to estimates and assumptions include
revenue recognition, allowances for deferred tax assets and liabilities, and assessment of goodwill and other intangible assets for
impairment. Estimates are subject to a degree of uncertainty and actual results could differ from these estimates.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents.

Marketable Securities

The Company’s marketable securities consist of available-for-sale debt securities with original maturities exceeding three

months.

Concentration of Risk

The Company is potentially exposed to concentrations of risk associated with its accounts receivable. However, this risk is
limited due to the Company’s large number of clients and their dispersion across many different industries and geographies. At
December 31, 2019 and 2018, the Company had no significant concentrations of risk.

Accounts Receivable

The Company’s accounts receivable consists of trade receivables. The allowance for doubtful accounts is developed based
upon several factors including the age of the Company’s accounts receivable, historical write-off experience and specific account
analysis. These factors may change over time, impacting the allowance level.

Fair Value of Financial Instruments

Cash equivalents are stated at cost, which approximates fair value. The carrying value for receivables from clients, accounts
payable, deferred revenue and other accrued liabilities reasonably approximate fair value due to the nature of the financial
instruments and the short-term nature of the items.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful
life of the asset or, for leasehold improvements, the shorter of the lease term or the estimated useful life of the asset, as follows:

Office furniture, fixtures and equipment
Computer equipment and software

5–10 years
3–7 years

Leasehold improvements are depreciated over the lesser of the lease term or life of the asset improvement, which typically

range from three to ten years.

Depreciation is calculated for tax purposes using accelerated methods, where applicable.

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Long-lived Assets

The Company reviews its long-lived assets, including property and equipment, for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge, equal to
the amount by which the carrying amount of the asset exceeds the fair value of the asset, is recognized.

Investments

The Company’s investments consist primarily of available-for-sale investments within the U.S. non-qualified deferred

compensation plan (the “Plan”).

Available-for-sale investments are reported at fair value with changes in unrealized gains (losses) and realized gains (losses)

recorded as a non-operating expense in Other, net in the Consolidated Statements of Comprehensive Income (Loss).

Goodwill and Other Intangible Assets

Goodwill represents the difference between the purchase price of acquired companies and the related fair value of the net
assets acquired, which is accounted for by the acquisition method of accounting. Other intangible assets include client relationships,
trade names, and employee non-compete agreements. The Company performs assessments of the carrying value of goodwill at
least annually and of its goodwill and other intangible assets whenever events occur or circumstances indicate that a carrying
amount of these assets may not be recoverable. These circumstances include a significant change in business climate, attrition of
key personnel, changes in financial condition or results of operations, a prolonged decline in the Company’s stock price and market
capitalization, competition, and other factors.

The goodwill impairment test compares the fair value of a reporting unit to its carrying amount, including goodwill. The
Company operates four reporting units: Americas, Europe (which includes Africa), Asia Pacific (which includes the Middle East)
and Heidrick Consulting. The goodwill impairment test is completed by comparing the fair value of a reporting unit with its
carrying amount. The fair value of each of the Company’s reporting units is determined using a discounted cash flow methodology.
An impairment charge is recognized for the amount by which the carrying value of the reporting unit exceeds its fair value;
however, the loss recognized is not to exceed the total amount of goodwill allocated to that reporting unit.

The other intangible asset impairment review compares the carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment
charge, equal to the amount by which the carrying amount of the asset exceeds the fair value, is recognized.

Other intangible assets acquired are amortized either using the straight-line method over their estimated useful lives or based

on the projected cash flow associated with the respective intangible assets.

Restructuring Charges

The Company accounts for restructuring charges by recognizing a liability at fair value when the costs are incurred.

Revenue Recognition

See Note 3, Revenue.

Reimbursements

The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as revenue

and expense in its Consolidated Statements of Comprehensive Income (Loss).

Salaries and Benefits

Salaries and benefits consist of compensation and benefits paid to consultants, executive officers, and administrative and
support personnel, of which the most significant elements are salaries and annual performance-related bonuses. Other items in
this category are expenses related to sign-on bonuses, forgivable employee loans and minimum guaranteed bonuses (often incurred

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in connection with the hiring of new consultants), restricted stock unit and performance share unit amortization, payroll taxes,
profit sharing and retirement benefits, and employee insurance benefits.

Salaries and benefits are recognized on an accrual basis. Certain sign-on bonuses, retention awards, and minimum guaranteed

compensation are capitalized and amortized in accordance with the terms of the respective agreements.

A portion of the Company’s consultants’ and management cash bonuses are deferred and paid over a three-year vesting period.
The portion of the bonus is approximately 15% depending on the employee’s level or position. The compensation expense related
to the amounts being deferred is recognized on a graded vesting attribution method over the requisite service period. This service
period begins on January 1 of the respective fiscal year and continues through the deferral date, which coincides with the Company’s
bonus payments in the first quarter of the following year and for an additional three-year vesting period. The deferrals are recorded
in Accrued salaries and benefits within both Current liabilities and Non-current liabilities in the Consolidated Balance Sheets.

Income Taxes

Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of
assets and liabilities, applying enacted statutory tax rates in effect for the year in which the tax differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes
in tax laws and rates on the date of enactment.

Earnings per Common Share

Basic earnings per common share is computed by dividing net income (loss) by weighted average common shares outstanding
for the year. Diluted earnings (loss) per share reflect the potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted. Common equivalent shares are excluded from the determination of diluted earnings
per share in periods in which they have an anti-dilutive effect.

The following table sets forth the computation of basic and diluted earnings (loss) per share:

Net income (loss)
Weighted average shares outstanding:

Basic

Effect of dilutive securities:

Restricted stock units
Performance stock units

Diluted

Basic earnings (loss) per share

Diluted earnings (loss) per share

2019

December 31,

2018

2017

46,869

49,295

(48,635)

19,103

285
163
19,551
2.45

2.40

18,917

406
209
19,532
2.61

2.52

18,735

—
—
18,735
(2.60)
(2.60)

Weighted average restricted stock units and performance stock units outstanding that could be converted into
approximately 327,000 and 80,000 common shares, respectively, for the year ended December 31, 2017, were not included in the
computation of diluted loss per share because the effects would be anti-dilutive.

Translation of Foreign Currencies

The Company generally designates the local currency for all its subsidiaries as the functional currency. The Company translates
the assets and liabilities of its subsidiaries into U.S. dollars at the current rate of exchange prevailing at the balance sheet date.
Revenue and expenses are translated at a monthly average exchange rate for the period. Translation adjustments are reported as
a component of Accumulated other comprehensive income.

Restricted Cash

Historically, the Company had lease agreements and business licenses with terms that required the Company to restrict cash
through the termination dates of the agreements. Current and non-current restricted cash is included in Other current
assets and Other non-current assets, respectively, in the Condensed Consolidated Balance Sheets.

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The following table provides a reconciliation of the cash and cash equivalents between the Condensed Consolidated Balance

Sheets and the Condensed Consolidated Statement of Cash Flows as of December 31, 2019, 2018 and 2017:

Cash and cash equivalents

Restricted cash included within other current assets

Restricted cash included within other non-current assets

Total cash, cash equivalents and restricted cash

Recently Issued Financial Accounting Standards

December 31,

2019

2018

2017

$271,719

$279,906

$207,534

—

108

248

526

102

$271,719

$280,262

$208,162

Recently Adopted Financial Accounting Standards

On January 1, 2019, the Company adopted ASU No. 2016-02, Leases, ASU No. 2018-10, Codification Improvements to Topic
842 (Leases) and ASU No. 2018-11, Targeted Improvements to Topic 842 (Leases). The guidance is intended to increase
transparency and comparability among companies for leasing transactions, including a requirement for companies that lease assets
to recognize on their balance sheets the assets and liabilities for the rights and obligations created by those leases. The guidance
also provides for disclosures that allow the users of financial statements to assess the amount, timing, and uncertainty of cash
flows arising from leases.

The Company adopted the guidance on January 1, 2019 using the modified retrospective method without restatement of
comparative periods. As such, periods prior to the date of adoption are presented in accordance with ASC 840 - Leases. The
Company utilized the available practical expedient that allowed for the Company to not reassess whether existing contracts contain
a lease under the new definition of a lease, lease classification for existing leases and whether previously capitalized initial direct
costs would qualify for capitalization under the new guidance.

The adoption of this guidance had a material impact on the Condensed Consolidated Balance Sheet as of December 31, 2019
due to the recognition of equal right-of-use assets and lease liabilities for the Company's portfolio of operating leases. The right-
of-use asset balance was then adjusted by the reclassification of pre-existing prepaid and accrued rent balances from other line
items within the Condensed Consolidated Balance Sheet. The adoption had an immaterial impact on the Condensed Consolidated
Statement of Comprehensive Income and Condensed Consolidated Statement of Cash Flows for the year ended December 31,
2019. The adoption had no impact on the Condensed Consolidated Statement of Changes in Stockholders' Equity for the year
ended December 31, 2019.

Additional information and disclosures required by the new standard are contained in Note 6, Leases.

On January 1, 2019, the Company adopted ASU No. 2018-02, Income Statement - Reporting Comprehensive Income, which
is intended to improve the usefulness of information reported as a result of the Tax Cuts and Jobs Act. The new guidance allows
a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the
Tax Cuts and Jobs Act. The adoption of this guidance did not have an impact on the Company's consolidated financial statements.

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3. Revenue

Executive Search

Revenue is recognized as we satisfy our performance obligations by transferring a good or service to a client. Generally, each
of our executive search contracts contain one performance obligation which is the process of identifying potentially qualified
candidates for a specific client position. In most contracts, the transaction price includes both fixed and variable consideration.
Fixed compensation is comprised of a retainer, equal to approximately one-third of the estimated first year compensation for the
position to be filled, and indirect expenses, equal to a specified percentage of the retainer, as defined in the contract. The Company
generally bills its clients for its retainer and indirect expenses in one-third increments over a three-month period commencing in
the month of a client’s acceptance of the contract. If actual compensation of a placed candidate exceeds the original compensation
estimate, the Company is often authorized to bill the client for one-third of the excess compensation. The Company refers to this
additional billing as uptick revenue. In most contracts, variable consideration is comprised of uptick revenue and direct expenses.
The Company bills its clients for uptick revenue upon completion of the executive search, and direct expenses are billed as incurred.

As required under ASU No. 2014-09, the Company now estimates uptick revenue at contract inception, based on a portfolio
approach, utilizing the expected value method based on a historical analysis of uptick revenue realized in the Company’s geographic
regions and industry practices, and initially records a contract’s uptick revenue in an amount that is probable not to result in a
significant reversal of cumulative revenue recognized when the actual amount of uptick revenue for that contract is known.
Differences between the estimated and actual amounts of variable consideration are recorded when known. The Company does
not estimate revenue for direct expenses as it is not materially different than recognizing revenue as direct expenses are incurred.

Heidrick Consulting

Revenue is recognized as we satisfy our performance obligations by transferring a good or service to a client. Heidrick
Consulting enters into contracts with clients that outline the general terms and conditions of the assignment to provide succession
planning, executive assessment, top team and board effectiveness and culture shaping programs. The consideration the Company
expects to receive under each contract is generally fixed. Most of our consulting contracts contain one performance obligation,
which is the overall process of providing the consulting service requested by the client. The majority of our consulting revenue is
recognized over time utilizing both input and output methods. Contracts that contain coaching sessions, training sessions or the
completion of assessments are recognized using the output method as each session or assessment is delivered to the client. Contracts
that contain general consulting work are recognized using the input method utilizing a measure of progress that is based on time
incurred on the project.

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Given the continuous nature of this commitment, the Company utilizes straight-line ratable revenue recognition over the estimated
subscription period as the Company's clients will receive and consume the benefits from Culture Connect equally throughout the
contract period. Revenue related to client renewals of enterprise agreements is recognized over the term of the renewal, which is
generally twelve months. Enterprise agreements do not comprise a significant portion of the Company's revenue.

Contract Balances

Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.
Contract assets and liabilities are classified as current due to the nature of the Company's contracts, which are completed within
one year. Contract assets are included within Other Current Assets on the Condensed Consolidated Balance Sheets.

Unbilled receivables: Unbilled revenue represents contract assets from revenue recognized over time in excess of the amount
billed to the client and the amount billed to the client is solely dependent upon the passage of time. This amount includes revenue
recognized in excess of billed executive search retainers and Heidrick Consulting fees.

Contract assets: Contract assets represent revenue recognized over time in excess of the amount billed to the client and the
amount billed to the client is not solely subject to the passage of time. This amount primarily includes revenue recognized for
upticks and contingent placement fees in executive search contracts.

Deferred revenue: Contract liabilities consist of deferred revenue, which is equal to billings in excess of revenue recognized.

The following table outlines the changes in our contract asset and liability balances at the end of and during the period:

Contract assets

Unbilled receivables
Contract assets

Total contract assets

Contract liabilities
Deferred revenue

December 31,
2019

December 31,
2018

Variance

7,585
14,672
22,257

8,684
15,291
23,975

(1,099)
(619)
(1,718)

41,267

40,673

594

During the year ended December 31, 2019, we recognized revenue of $26.6 million that was included in the contract liabilities
balance at the beginning of the period. The amount of revenue recognized during the year ended December 31, 2019 from
performance obligations partially satisfied in previous periods as a result of changes in the estimates of variable consideration was
$19.4 million. During the year ended December 31, 2018, we recognized revenue of $28.0 million that was included in the contract
liabilities balance at the beginning of the period. The amount of revenue recognized during the year ended December 31, 2018, from
performance obligations partially satisfied in previous periods as a result of changes in the estimates of variable consideration
was $21.8 million.

4. Allowance for Doubtful Accounts

The activity of the allowance for doubtful accounts for the years ended:

Balance at January 1,

Provision charged to income
Write-offs
Foreign currency translation

Balance at December 31,

2019
3,502
5,900
(4,270)
8
5,140

December 31,
2018
2,534
3,790
(2,708)
(114)
3,502

2017
2,575
963
(1,134)
130
2,534

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5. Property and Equipment, net

The components of the Company’s property and equipment are as follows:

Leasehold improvements
Office furniture, fixtures and equipment
Computer equipment and software
Property and equipment, gross
Accumulated depreciation

Property and equipment, net

December 31,

2019

2018

47,269
17,740
27,531
92,540
(63,890)
28,650

48,455
17,919
27,063
93,437
(59,566)
33,871

Depreciation expense for the years ended December 31, 2019, 2018 and 2017, was $9.5 million, $11.0 million and $10.4

million, respectively.

6. Leases

The Company's lease portfolio is comprised of operating leases for office space and equipment. The majority of the Company's
leases include both lease and non-lease components, which the Company accounts for differently depending on the underlying
class of asset. Certain of the Company's leases include one or more options to renew or terminate the lease at the Company's
discretion. Generally, the renewal and termination options are not included in the right-of-use assets and lease liabilities as they
are not reasonably certain of exercise. The Company regularly evaluates the renewal and termination options and when they are
reasonably certain of exercise, includes the renewal or termination option in the Company's lease term.

As most of the Company's leases do not provide an implicit interest rate, the Company utilizes its incremental borrowing rate
based on the information available at the commencement date in determining the present value of lease payments. The Company
has a centrally managed treasury function; therefore, a portfolio approach is applied in determining the incremental borrowing
rate. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a fully collateralized
basis over a similar term in an amount equal to the total lease payments in a similar economic environment.

As of December 31, 2019, office leases have remaining lease terms that range from less than one year to 10.4 years, some of
which also include options to extend or terminate the lease. Most office leases contain both fixed and variable lease payments.
Variable lease costs consist primarily of rent escalations based on an established index or rate and taxes, insurance, and common
area or other maintenance costs, which are paid based on actual costs incurred by the lessor. The Company has elected to utilize
the available practical expedient to not separate lease and non-lease components for office leases.

As of December 31, 2019, equipment leases, which are comprised of vehicle and office equipment leases, have remaining
terms that range from less than one year to 4.8 years, some of which also include options to extend or terminate the lease. The
Company's equipment leases do not contain variable lease payments. The Company separates the lease and non-lease components
for its equipment leases. Equipment leases do not comprise a significant portion of the Company's lease portfolio.

Lease cost components included within General and Administrative Expenses in our Condensed Consolidated Statements of

Comprehensive Income (Loss) for the year ended December 31, 2019, were as follows:

Operating lease cost
Variable lease cost
Total lease cost

24,928
7,932
32,860

Rent expense, as previously defined under ASC 840, which includes the base rent, maintenance costs, operating expenses
and real estate taxes, and the costs of equipment leases for the years ended December 31, 2018, and 2017, was $33.2 million and
$32.2 million, respectively.

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Supplemental cash flow information related to the Company's operating leases for the year ended December 31, 2019, was

as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

33,797

19,640

The weighted average remaining lease term and weighted average discount rate for our operating leases as of December 31,

2019 was as follows:

Weighted Average Remaining Lease Term

Operating leases

Weighted Average Discount Rate

Operating leases

4.7 years

3.9%

The future maturities of the Company's operating lease liabilities for the years ended December 31, were as follows:

2020
2021
2022
2023
2024
Thereafter

Total lease payments

Less: Interest

Present value of lease liabilities

Operating Lease
Maturity

30,246
27,229
23,577
20,555
9,981
8,983
120,571
(10,228)
110,343

The minimum future operating lease payments due in each of the next five years as recorded under ASC 840 at December

2018, were as follows:

2019
2020
2021
2022
2023
Thereafter
Total

34,456
31,808
27,381
23,445
20,087
14,448
151,625

The Company has an obligation at the end of the lease term to return certain offices to the landlord in their original condition,
which is recorded at fair value at the time the liability is incurred. The Company had $3.0 million and $2.7 million of asset retirement
obligations as of December 31, 2019 and 2018, respectively, which are recorded within Other current liabilities and Other non-
current liabilities in the Consolidated Balance Sheets.

7. Financial Instruments and Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair
value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The
three levels of inputs used to measure fair value are as follows:

• Level 1 – Quoted prices in active markets for identical assets and liabilities.
• Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset

or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar
techniques that use significant unobservable inputs.

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Cash, Cash Equivalents and Marketable Securities

The Company's investments in marketable debt securities, which consist of U.S. Treasury bills and commercial paper, are
classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or
long-term based on each instrument's underlying contractual maturity date. Unrealized gains and losses on marketable debt securities
classified as available-for-sale are recognized in Accumulated other comprehensive income in the Consolidated Balance Sheets
until realized.

The Company's cash, cash equivalents, and marketable securities by significant investment category are as follows:

Balance at December 31, 2019

Cash

Level 1:

Money market funds
U.S. Treasury securities

Total Level 1

Fair Value

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

Balance Sheet
Classification

Cash and
Cash
Equivalents

Marketable
Securities

$ 177,493

—

139,705
155,366

13
13

15,661
— 139,718
— 155,379

15,661
78,565
94,226

—
61,153
61,153

Total

$155,366

— $ 155,379

$ 271,719

$ 61,153

Fair Value

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

Balance Sheet
Classification

Cash and
Cash
Equivalents

Marketable
Securities

$ 279,829

—

Balance at December 31, 2018

Cash

Level 1:

Money market funds

Total

— $

$ 279,906

—

Investments, Assets Designated for Retirement and Pension Plans and Associated Liabilities

The Company has a U.S. non-qualified deferred compensation plan that consists primarily of U.S. marketable securities and
mutual funds. The aggregate cost basis for these investments was $17.2 million and $14.6 million as of December 31, 2019 and
December 31, 2018, respectively.

The Company also maintains a pension plan for certain current and former employees in Germany. The pensions are individually
fixed Euro amounts that vary depending on the function and the eligible years of service of the employee. The Company’s investment
strategy is to support its pension obligations through reinsurance contracts. The BaFin—German Federal Financial Supervisory
Authority—supervises the insurance companies and the reinsurance contracts. The BaFin requires each reinsurance contract to
guarantee a fixed minimum return. The Company’s pension benefits are fully reinsured by group insurance contracts with ERGO
Lebensversicherung AG, and the group insurance contracts are measured in accordance with BaFin guidelines (including mortality
tables and discount rates) which are considered Level 2 inputs.

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The following tables provide a summary of the fair value measurements for each major category of investments, assets

designated for retirement and pension plans and associated liabilities measured at fair value on a recurring basis:

Balance at December 31, 2019

Level 1:

U.S. non-qualified deferred compensation
plan

Level 2:

Retirement and pension plan assets
Pension benefit obligation

Total Level 2

Balance Sheet Classification

Fair Value

Other
Current
Assets

Assets
Designated
for
Retirement
and Pension
Plans

Investments

Other
Current
Liabilities

Retirement
and Pension
Plans

$ 25,409

— $

— $ 25,409

— $

—

15,296
(20,918)
(5,622)

1,318
—
1,318

13,978
—
13,978

—
—
—

—
(1,318)
(1,318)

—
(19,600)
(19,600)

Total

$ 19,787

1,318

$ 13,978

$ 25,409

(1,318) $ (19,600)

Balance at December 31, 2018

Level 1:

U.S. non-qualified deferred compensation
plan

Level 2:

Retirement and pension plan assets
Pension benefit obligation

Total Level 2

Balance Sheet Classification

Fair Value

Other
Current
Assets

Assets
Designated
for
Retirement
and Pension
Plans

Investments

Other
Current
Liabilities

Retirement
and Pension
Plans

$ 19,442

— $

— $ 19,442

— $

—

16,384
(20,908)
(4,524)

1,349
—
1,349

15,035
—
15,035

—
—
—

—
(1,349)
(1,349)

—
(19,559)
(19,559)

Total

$ 14,918

1,349

$ 15,035

$ 19,442

(1,349) $ (19,559)

Contingent Consideration

The former owners of the entities acquired by the Company are eligible to receive additional cash consideration based on the
attainment of certain operating metrics in the periods subsequent to acquisition. Contingent consideration is valued using significant
inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting.
The Company determines the fair value of contingent consideration using discounted cash flow models. As of December 31, 2019,
all contingent consideration accruals are recorded within Other current liabilities on the Consolidated Balance Sheets.

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The following table provides a reconciliation of the beginning and ending balance of Level 3 liabilities for the year ended

December 31, 2019:

Balance at December 31, 2018

Earnout accretion
Earnout payments
Earnout adjustment
Foreign currency translation
Balance at December 31, 2019

8. Acquisitions

2Get Holdings Limited

Acquisition
Earnout
Accruals

(6,627)
(668)
3,009
(1,062)
70
(5,278)

In September 2019, the Company acquired 2GET Holdings Limited ("2GET"), a Brazil-based provider of executive search
services, and its wholly owned subsidiaries. Under the terms of the purchase agreement, the Company paid $5.2 million of initial
consideration for substantially all of the outstanding equity of 2GET. The acquisition was funded with $4.1 million of existing
cash at closing and $1.1 million of the Company's common stock transferred in October 2019. The common stock transferred as
consideration was reissued from the Company's treasury stock. The former owners of 2GET are eligible to receive additional cash
consideration, which the Company estimates to be between $5.0 million and $15.0 million, based on the achievement of certain
revenue and EBITDA milestones for the period from acquisition through 2023. The additional consideration is linked to future
service with the Company and is accounted for as compensation expense. The Company recorded $0.7 million of intangible assets,
consisting of the trade name of $0.4 million and customer relationships of $0.3 million, $3.8 million of goodwill, and $0.7 million
of net working capital. The goodwill is primarily related to the acquired workforce and strategic fit. The Company will not be able
to deduct the recorded goodwill for tax purposes.

Amrop A/S

In January 2018, the Company acquired Amrop A/S ("Amrop"), a Denmark-based provider of executive search services
for 24.3 million Danish Kroner (equivalent to $3.9 million on the acquisition date) of initial consideration which was funded from
existing cash. The former owners of Amrop are expected to receive additional cash consideration based on fee revenue generated
during the two-year period following the completion of the acquisition. When estimating the value of future cash consideration,
the Company has accrued $5.3 million as of December 31, 2019. The Company recorded $1.7 million of intangible assets related
to customer relationships and $5.5 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic
fit.

9. Goodwill and Other Intangible Assets

Goodwill

The Company's goodwill by segment is as follows:

Executive Search

Americas

Europe

Asia Pacific

Total Executive Search

Heidrick Consulting

Goodwill, gross

Accumulated impairment

Goodwill, net

December 31,
2019

December 31,
2018

92,497

25,579

8,755

126,831

36,257

163,088
(36,257)
126,831

88,410

24,924

8,758

122,092

36,257

158,349
(36,257)
122,092

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Changes in the carrying amount of goodwill by segment for the years ended December 31, 2019, 2018, and 2017 were as

follows:

Balance as of December 31, 2016

Goodwill

Accumulated impairment

Goodwill, net as of December 31, 2016

Philosophy IB acquisition

Foreign currency translation

Impairment

Goodwill, net as of December 31, 2017

Amrop acquisition

Foreign currency translation

Goodwill, net as of December 31, 2018

2GET acquisition

Foreign currency translation

Executive Search

Americas

Europe

Asia Pacific

Heidrick
Consulting

Total

88,101

19,092

8,893

35,758

$ 151,844

—

88,101

19,092

357

232

—

88,690

—
(280)
88,410

3,793

294

—

1,808

—

20,900

5,478
(1,454)
24,924

—

655

—

8,893

—

409

—

9,302

—
(544)
8,758

—
(3)
8,755

—

35,758

151,844

364

492
(36,257)
—

—

2,941
(36,257)
118,892

5,478
(2,278)
122,092

3,793

946

— $ 126,831

Goodwill, net as of December 31, 2019

92,497

25,579

In September 2019, the Company acquired 2GET and included $3.8 million of goodwill related to the acquisition in the

Americas segment.

During the 2019 fourth quarter, the Company conducted its annual goodwill impairment evaluation as of October 31, 2019
in accordance with ASU No. 2017-04, Intangibles - Goodwill and Other. The goodwill impairment test is completed by comparing
the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying
value of the reporting unit exceeds its fair value; however, the loss recognized is not to exceed the total amount of goodwill allocated
to that reporting unit.

The impairment test is considered for each of the Company’s reporting units that has goodwill as defined in the accounting
standard for goodwill and intangible assets. The Company operates four reporting units: Americas, Europe (which includes Africa),
Asia Pacific (which includes the Middle East) and Heidrick Consulting. As of October 31, 2019, only the Americas, Europe and
Asia Pacific reporting units had recorded goodwill.

During the impairment evaluation process, the Company used a discounted cash flow methodology to estimate the fair value
of each of its reporting units with goodwill. The discounted cash flow approach is dependent on a number of factors, including
estimates of future market growth and trends, forecasted revenue and costs, capital investments, appropriate discount rates, certain
assumptions to allocate shared costs, assets and liabilities, historical and projected performance of the reporting unit and the
macroeconomic conditions affecting each of the Company’s reporting units. The assumptions used in the determination of fair
value were (1) a forecast of growth in the near and long term; (2) the discount rate; (3) working capital investments; and (4) other
factors.

Based on the results of the impairment analysis, the fair values of the Americas, Europe, and Asia Pacific reporting units

exceeded their carrying values by 329%, 21% and 30%, respectively.

During the twelve months ended December 31, 2017, the Company determined that the goodwill within the former Culture
Shaping and Leadership Consulting reporting units was impaired, which resulted in impairment charges of $29.3 million and $6.9
million, respectively, to write off all of the goodwill associated with each of the reporting units. The impairment charges are
recorded within Impairment charges in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the twelve
months ended December 31, 2017. The impairments were non-cash in nature and did not affect our current liquidity, cash flows,
borrowing capability or operations, nor did they impact the debt covenants under our credit agreement. Effective January 1, 2018,
the Company completed its integration of the Culture Shaping and Leadership Consulting reporting units into the newly created
Heidrick Consulting reporting unit.

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Other Intangible Assets, net

The Company’s other intangible assets, net, by segment, are as follows:

Executive Search

Americas

Europe

Asia Pacific

Total Executive Search

Heidrick Consulting

Total Other Intangible Assets, Net

December 31,
2019

December 31,
2018

557

1,314

1,935

—

1,935

2,086

2,216

—

2,216

In September 2019, the Company acquired 2GET and recorded customer relationships and trade name intangible assets in the

Americas segment of $0.3 million and $0.4 million, respectively.

During the twelve months ended December 31, 2017, the Company determined that the intangible assets within the Culture
Shaping and Leadership Consulting reporting units were impaired, which resulted in impairment charges of $9.9 million and $4.6
million, respectively, to write off all intangible assets associated with each reporting unit. The impairment charges are recorded
within Impairment charges in the Condensed Consolidated Statement of Comprehensive Income (Loss) for the twelve months
ended December 31, 2017. The impairment charges were non-cash in nature and did not affect current liquidity, cash flows,
borrowing capability or operations, nor did they impact the debt covenants under our credit agreement.

The carrying amount of amortizable intangible assets and the related accumulated amortization were as follows:

December 31, 2019

December 31, 2018

Weighted
Average
Life (in
years)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

6.6

5.0

6.3

$ 16,302

$ (14,683) $

1,619

$ 15,910

362

(46)

316

—

$ 16,664

$ (14,729) $

1,935

$ 15,910

(13,694) $ 2,216
—
(13,694) $ 2,216

—

Client relationships

Trade name

Total intangible assets

Intangible asset amortization expense for the years ended December 31, 2019, 2018 and 2017, was $0.9 million, $1.5 million

and $4.4 million, respectively.

The Company's estimated future amortization expense related to intangible assets as of December 31, 2019 for the years ended

December 31st is as follows:

2020

2021

2022

2023

2024

Thereafter

Total

798

507

319

188

1,935

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10. Other Current Assets and Non-Current Liabilities

The components of other current assets are as follows:

Contract assets
Other

Total other current assets

The components of other non-current liabilities are as follows:

Premise related costs
Other

Total other non-current liabilities

11. Line of Credit

December 31,
2019

December 31,
2018

22,257
5,591
27,848

23,975
5,623
29,598

December 31,
2019

December 31,
2018

2,392
2,242
4,634

15,473
1,950
17,423

On October 26, 2018, the Company entered into a new Credit Agreement (the "2018 Credit Agreement") to replace the Second
Amended and Restated Credit Agreement (the "Restated Credit Agreement") executed on June 30, 2015. The 2018 Credit
Agreement provides the Company with a senior unsecured revolving line of credit with an aggregate commitment of $175 million,
which includes a sublimit of $25 million for letters of credit, and a $10 million swingline loan sublimit. The agreement also includes
a $75 million expansion feature. The 2018 Credit Agreement will mature in October 2023. Borrowings under the 2018 Credit
Agreement bear interest at the Company's election of the Alternate Base Rate (as defined in the 2018 Credit Agreement) or Adjusted
LIBOR (as defined in the 2018 Credit Agreement) plus a spread as determined by the Company’s leverage ratio.

Borrowings under the 2018 Credit Agreement may be used for working capital, capital expenditures, Permitted Acquisitions
(as defined in the 2018 Credit Agreement) and for other general purposes of the Company and its subsidiaries. The obligations
under the 2018 Credit Agreement are guaranteed by certain of the Company's subsidiaries.

The Company capitalized approximately $1.0 million of loan acquisition costs related to the 2018 Credit Agreement, which

will be amortized over the remaining term of the agreement.

Before October 26, 2018, the Company was party to its Restated Credit Agreement. The Restated Credit Agreement provided
a single senior unsecured revolving line of credit with an aggregate commitment of up to $100 million, which includes a sublimit
of $25 million for letters of credit, and a $50 million expansion feature (the “Replacement Facility”). Borrowings under the Restated
Credit Agreement bore interest at the Company’s election of the existing Alternate Base Rate (as defined in the Restated Credit
Agreement) or Adjusted LIBOR Rate (as defined in the Restated Credit Agreement) plus a spread as determined by the Company’s
leverage ratio.

During the three months ended March 31, 2018, the Company borrowed $20 million under the Restated Credit Agreement
and elected the Adjusted LIBOR Rate. The Company subsequently repaid $8 million during the three months ended March 31,
2018 and $12 million during the three months ended June 30, 2018.

During the three months ended March 31, 2017, the Company borrowed $40 million under the Restated Credit Agreement
and elected the Adjusted LIBOR rate. The Company subsequently repaid $15 million during the three months ended March 31,
2017 and $25 million during the three months ended June 30, 2017.

As of December 31, 2019, and 2018, the Company had no outstanding borrowings under the 2018 Credit Agreement. The
Company was in compliance with the financial and other covenants under the 2018 Credit Agreement and no event of default
existed.

12. Employee Benefit Plans

Qualified Retirement Plan

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The Company has a defined contribution retirement plan (the “Plan”) for all eligible employees in the United States. Eligible
employees may begin participating in the Plan upon their hire date. The Plan contains a 401(k) provision, which provides for
employee pre-tax and/or after-tax contributions, from 1% to 50% of their eligible compensation up to a combined maximum
permitted by law. The Company matched employee contributions on a dollar-for-dollar basis per participant up to the greater of
$6,000, or 6.0%, of eligible compensation for the years ended December 31, 2019, 2018 and 2017. Employees are eligible for the
Company match immediately provided that they are working on the last day of the Plan year in which the match is made. The
Plan also provides for employees who retire, die or become disabled during the Plan year to receive the Company match for that
Plan year. The Plan provides that forfeitures will be used to reduce the Company’s contributions. Forfeitures are created annually
by participants who terminate employment before becoming entitled to the Company’s matching contribution under the Plan. The
Company also has the option of making discretionary contributions. There were no discretionary contributions made for the years
ended December 31, 2019, 2018 and 2017. The expense that the Company incurred for matching employee contributions for the
years ended December 31, 2019, 2018 and 2017, was $6.3 million, $5.7 million and $5.6 million, respectively.

Deferred Compensation Plans

The Company has a deferred compensation plan for certain U.S. employees (the “U.S. Plan”) that became effective on
January 1, 2006. The U.S. Plan allows participants to defer up to 25% of their base compensation and up to the lesser of $500,000
or 25% of their eligible bonus compensation into several different investment vehicles. These deferrals are immediately vested
and are not subject to a risk of forfeiture. In 2019 and 2018, all deferrals in the U.S. Plan were funded. The compensation deferred
in the U.S. Plan was $23.8 million and $18.3 million at December 31, 2019 and 2018, respectively. The assets of the U.S. Plan
are included in Investments and the liabilities of the U.S. Plan are included in Retirement and pension plans in the Consolidated
Balance Sheets as of December 31, 2019 and 2018.

The Company has a Non-Employee Directors Voluntary Deferred Compensation Plan whereby non-employee members of
the Company’s Board of Directors may elect to defer up to 100% of the cash component of their directors’ fees into several different
investment vehicles. As of December 31, 2019 and 2018, the total amounts deferred under the plan were $1.6 million and $1.1
million, respectively, all of which were funded. The assets of the plan are included in Investments and the liabilities of the plan
are included in Retirement and pension plans in the Consolidated Balance Sheets at December 31, 2019 and 2018.

The U.S. and Non-Employee Directors Voluntary Deferred Compensation Plans consist primarily of marketable securities

and mutual funds, all of which are valued using Level 1 inputs (See Note 7, Financial Instruments and Fair Value).

13. Pension Plan and Life Insurance Contract

The Company maintains a pension plan for certain current and former employees in Germany. The pensions are individually

fixed Euro amounts that vary depending on the function and the eligible years of service of the employee.

Benefit obligation at January 1,

Interest cost
Actuarial (gain) loss
Benefits paid
Cumulative translation adjustment

Benefit obligation at December 31,

2019

2018

20,908
338
1,506
(1,375)
(459)
20,918

23,886
373
(886)
(1,450)
(1,015)
20,908

The benefit obligation amounts recognized in the Consolidated Balance Sheets are as follows:

Current liabilities
Noncurrent liabilities

Total

December 31,

2019

2018

1,318
19,600
20,918

1,349
19,559
20,908

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The components of and assumptions used to determine the net periodic benefit cost are as follows:

Net period benefit cost:
Interest cost
Amortization of net loss

Net periodic benefit cost

Weighted average assumptions

Discount rate (1)
Rate of compensation increase

2019

December 31,

2018

2017

338
35
373

1.71%
—%

373
92
465

1.64%
—%

362
111
473

1.49%
—%

Assumptions to determine the Company’s benefit obligation are as follows:

Discount rate (1)
Rate of compensation increase
Measurement Date

2019

1.03%
—%
12/31/2019

December 31,

2018

1.71%
—%
12/31/2018

2017

1.64%
—%
12/31/2017

(1) The discount rates are based on long-term bond indices adjusted to reflect the longer duration of the benefit obligation.

The amounts in Accumulated other comprehensive income as of December 31, 2019 and 2018, that had not yet been recognized

as components of net periodic benefit cost were $4.0 million and $2.6 million, respectively.

The Company’s investment strategy is to support its pension obligations through reinsurance contracts. The BaFin—German
Federal Financial Supervisory Authority—supervises the insurance companies and the reinsurance contracts. The BaFin requires
each reinsurance contract to guarantee a fixed minimum return. The Company’s pension benefits are fully reinsured by group
insurance contracts with ERGO Lebensversicherung AG, and the group insurance contracts are measured in accordance with
BaFin guidelines (including mortality tables and discount rates) which are considered Level 2 inputs (See Note 7, Financial
Instruments and Fair Value). The fair value at December 31, 2019 and 2018, was $15.3 million and $16.4 million, respectively.

Since the pension assets are not segregated in trust from the Company’s other assets, the pension assets are not shown as an
offset against the pension liabilities in the Consolidated Balance Sheets. These assets are included in the Consolidated Balance
Sheets at December 31, 2019 and 2018, as a component of Other current assets and Assets designated for retirement and pension
plans.

The benefits expected to be paid in each of the next five years, and in the aggregate for the five years thereafter are as follows:

2020
2021
2022
2023
2024
2025 through 2029

14. Stock-Based Compensation

$ 1,318
1,305
1,288
1,269
1,245
5,713

The Company's Second Amended and Restated 2012 Heidrick & Struggles GlobalShare Program (the "2012 Program')
provides for grants of stock options, stock appreciation rights and other stock-based awards that are valued based upon the grant
date fair value of shares. These awards may be granted to directors, selected employees and independent contractors.

As of December 31, 2019, 2,551,441 shares have been issued under the 2012 Program and 981,682 shares remain available
for future awards, which includes 683,123 forfeited shares. The 2012 Program provides that no awards can be granted after May 24,
2028.

In September 2017, the Company entered into an agreement with its former Chief Executive Officer pursuant to which
Mr. Wolstencroft voluntarily agreed, with the concurrence of the Board of Directors, to forfeit 100 percent of his 2017 restricted
stock unit and performance stock unit grants totaling 39,352 restricted stock units and 39,352 performance stock units.

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Mr. Wolstencroft vested in 41,667 restricted stock units, or 100 percent of his 2014 sign-on restricted stock unit grant, without
proration. With respect to his 2015 and 2016 restricted stock unit and performance stock unit grants, Mr. Wolstencroft vested an
agreed upon pro-rata portion of the tranches scheduled to vest in 2017 through 2019 (and with the performance goals for performance
stock units deemed to have been achieved at target level performance) totaling 9,948 restricted stock units and 50,007 performance
stock units, and he agreed to forfeit the remaining portions of such 2015 and 2016 restricted stock unit and performance stock unit
awards totaling 28,903 restricted stock units and 26,246 performance stock units.

The Company measures its stock-based compensation costs based on the grant date fair value of the awards and recognizes

these costs in the financial statements over the requisite service period.

A summary of information with respect to stock-based compensation is as follows:

Salaries and employee benefits (1)
General and administrative expenses
Income tax benefit related to stock-based compensation included in net income

December 31,

2019
$ 12,857
460
3,529

2018
9,548
562
2,674

2017
4,597
338
1,948

(1) Includes $3.0 million and $1.2 million of expense related to cash settled restricted stock units for the years ended December

31, 2019, and 2018, respectively.

Restricted Stock Units

Restricted stock units are generally subject to ratable vesting over a three-year period. Beginning in 2018, a portion of the
Company's restricted stock units are subject to ratable vesting over a four-year period. Compensation expense related to service-
based restricted stock units is recognized on a straight-line basis over the vesting period.

Restricted stock unit activity for the years ended December 31, 2019, 2018 and 2017 is as follows:

Outstanding on December 31, 2017
Granted
Vested and converted to common stock
Forfeited
Outstanding on December 31, 2018
Granted
Vested and converted to common stock
Forfeited
Outstanding on December 31, 2019

Number of
Restricted
Stock Units

Weighted-
Average
Grant-date
Fair Value

491,154
297,664
(199,550)
(76,822)
512,446
270,488
(175,792)
(8,154)
598,988

21.92
34.64
21.66
25.76
28.83
33.55
24.19
34.29
32.25

As of December 31, 2019, there was $11.4 million of pre-tax unrecognized compensation expense related to unvested restricted

stock units, which is expected to be recognized over a weighted average of 2.5 years.

Performance Stock Units

The Company grants performance stock units to certain of its senior executives. The performance stock units are generally
subject to a cliff vesting at the end of a three-year period. The vesting will vary between 0% - 200% based on the attainment of
operating income goals over the three-year vesting period. The performance stock units are expensed on a straight-line basis over
the three-year vesting period.

During the year ended December 31, 2019, performance stock units were granted to certain employees of the Company,
subject to a cliff vesting period of three years and certain other performance conditions. Half of award is based on the achievement
of certain operating margin thresholds and half of the award is based on the Company's total shareholder return, relative to a peer
group. The fair value of the awards based on total shareholder return was determined using the Monte-Carlo simulation model. A
Monte Carlo simulation model uses stock price volatility and other variables to estimate the probability of satisfying the performance
conditions and the resulting fair value of the award.

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Performance share unit activity for the years ended December 31, 2019, 2018 and 2017 was as follows:

Outstanding on December 31, 2017

Granted
Vested and converted to common stock
Forfeited

Outstanding on December 31, 2018

Granted
Vested and converted to common stock
Forfeited

Outstanding on December 31, 2019

Number of
Performance
Stock Units

Weighted-
Average
Grant-date
Fair Value

185,891
102,138
(43,361)
(47,551)
197,117
81,661
(99,219)
—
179,559

23.82
25.81
23.64
23.87
24.88
35.58
25.04
—
32.63

As of December 31, 2019, there was $3.4 million of pre-tax unrecognized compensation expense related to unvested

performance stock units, which is expected to be recognized over a weighted average of 1.8 years.

Phantom Stock Units

Phantom stock units are grants of phantom stock with respect to shares of the Company's common stock that are settled in
cash and are subject to various restrictions, including restrictions on transferability, vesting and forfeiture provisions. Shares of
phantom stock that do not vest for any reason will be forfeited by the recipient and will revert to the Company.

Phantom stock units are subject to vesting over a period of four years and certain other conditions, including continued service
to the Company. As a result of the cash-settlement feature of the awards, the Company considers the awards to be liability awards,
which are measured at fair value at each reporting date and the vested portion of the award is recognized as a liability to the extent
that the service condition is deemed probable. The fair value of the phantom stock awards on the balance sheet date was determined
using the closing share price of the Company's common stock on that date and is included within Accrued salaries and benefits -
non-current on the Consolidated Balance Sheets.

The Company recorded phantom stock-based compensation expense of $3.0 million and $1.2 million for the years ended

December 31, 2019 and December 31, 2018, respectively.

Phantom stock unit activity for the years ended December 31, 2019, 2018, and 2017 was as follows:

Outstanding on December 31, 2017

Granted
Vested
Forfeited

Outstanding on December 31, 2018

Granted
Vested
Forfeited

Outstanding on December 31, 2019

Number of
Phantom
Stock Units
—
111,673
—
—
111,673
154,387
—
—
266,060

As of December 31, 2019, there was $5.2 million of pre-tax unrecognized compensation expense related to unvested phantom

stock units, which is expected to be recognized over a weighted average of 3.3 years.

15. Restructuring

Restructuring Charges

During the year ended December 31, 2019, the Company recorded restructuring charges of $4.1 million related to the closing
of the Company's legacy Brazil operations due to the acquisition of 2GET (see Note 8, Acquisitions). The restructuring charges

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primarily consist of employee-related costs for the Company's legacy Brazil operations. The America's incurred $4.1 million in
restructuring charges, while Global Operations Support incurred less than $0.1 million in restructuring charges.

In 2017, the Company recorded restructuring charges of $15.7 million in connection with initiatives to reduce overall costs
and improve operational efficiencies. The primary components of the restructuring included: the elimination of two executive
officer roles for a flatter leadership structure, a workforce reduction as the firm aligned its support resources to better meet
operational needs and recognize synergies with the combination of Leadership Consulting and Culture Shaping, a reduction of
the firm’s real estate expenses and support costs by consolidating or closing three of its locations across its global footprint and
the acceleration of future expenses under certain contractual obligations.

These charges consisted of $13.1 million of employee-related costs, including severance associated with reductions in our
workforce of 251 employees globally, $2.3 million of other professional and consulting fees and $0.3 million of expenses associated
with closing three office locations.

Restructuring charges by operating segment for the years ended December 31, were as follows:

Executive Search

Americas

Europe

Asia Pacific

Total Executive Search

Heidrick Consulting

Global Operations Support

Total restructuring

December 31,

2019

2018

2017

4,102

— $

—

4,102

—

784

3,993

2,046

6,823

3,393

5,450

4,130

— $

15,666

Changes in the restructuring accrual for the years ended December 31, 2019, 2018, and 2017 were as follows:

Employee
Related

Office
Related

Other

Total

— $

—

13,065
(1,199)
—

11,866
(8,689)
—
(1,843)
(65)
1,269

4,130
(2,213)
—

308
(5)
(155)
148
(248)
195
(95)
—

—

2,293
(1,282)
—

1,011
(993)
—

5
(6)
17

—

—
(17)
—

—

15,666
(2,486)
(155)
13,025
(9,930)
195
(1,933)
(71)
1,286

4,130
(2,213)
(17)
4

3,245

— $

3,245

Accrual balance at December 31, 2016

Restructuring charges

Cash payments

Non-cash write-offs

Accrual balance at December 31, 2017

Cash payments

Non-cash write-offs

Other

Exchange rate fluctuations

Accrual balance at December 31, 2018

Restructuring charges

Cash payments

Non-cash write-offs

Other

Exchange rate fluctuations

Accrual balance at December 31, 2019

16. Income Taxes

The sources of income (loss) before income taxes are as follows:

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United States

Foreign

Income (loss) before income taxes

The provision for (benefit from) income taxes are as follows:

Current

Federal

State and local

Foreign

Current provision for income taxes

Deferred

Federal
State and local

Foreign

Deferred provision (benefit) for income taxes

Total provision for income taxes

December 31,

2019

2018

2017

$ 53,461

$ 47,191

15,828

23,301

$ 69,289

$ 70,492

$ (28,577)
(841)
$ (29,418)

December 31,

2019

2018

2017

$ 11,311

$ 12,311

$ 10,107

4,422

4,423

4,843

6,907

2,372

8,257

20,156

24,061

20,736

2,031
698
(465)
2,264

$ 22,420

6,403
(354)
(8,913)
(2,864)
$ 21,197

5,642
(2,951)
(4,210)
(1,519)
$ 19,217

A reconciliation of the provision for income taxes to income taxes at the statutory U.S. federal income tax rate of 21% for the

years ended December 31, 2019 and 2018, and 35% for the year ended December 31, 2017 is as follows:

December 31,

2019

2018

2017

Income tax provision (benefit) at the statutory U.S. federal rate

State income tax provision (benefit), net of federal tax benefit

Nondeductible expenses, net

Foreign taxes (includes rate differential and changes in foreign valuation allowance)

Release of valuation allowance

Additional U.S. tax on foreign operations

Current/deferred true-up

Tax reform

Other, net

Total provision for income taxes

$ 14,551

$ 14,803

3,509

1,570

698
(117)
2,550
(157)
—
(184)
$ 22,420

$ (10,296)
(593)
3,282

5,465
(3,200)
—

567

23,732

260

3,242

1,651
(35)
(43)
1,628
(1,199)
—

1,150

$ 21,197

$ 19,217

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The deferred tax assets and liabilities are attributable to the following components:

Deferred tax assets attributable to:

Foreign net operating loss carryforwards

Accrued compensation and employee benefits

Deferred compensation

Foreign tax credit carryforwards

Accrued rent

Other accrued expenses

Deferred tax assets, before valuation allowance

Valuation allowance

Deferred tax assets, after valuation allowance

Deferred tax liabilities attributable to:

Goodwill

Taxes provided on unremitted earnings
Depreciation on property and equipment

Other

Deferred tax liabilities

Net deferred tax assets

December 31,

2019

2018

17,940

14,506

17,110

6,493

2,655

5,882

64,586
(24,200)
40,386

5,440

—
1,652

533

7,625

18,259

15,442

15,587

8,163

3,096

6,290

66,837
(26,460)
40,377

2,203

765
2,040

686

5,694

32,761

34,683

The recognition of deferred tax assets is based on management’s belief that it is more likely than not that the tax benefits
associated with temporary differences, net operating loss carryforwards and tax credits will be utilized. The Company assesses
the recoverability of the deferred tax assets on an ongoing basis. In making this assessment, the Company considers all positive
and negative evidence, and all potential sources of taxable income including scheduled reversals of deferred tax liabilities, tax-
planning strategies, projected future taxable income and recent financial performance. Certain of the Company's deferred tax
liabilities of $0.3 million and $0.2 million do not qualify for deferred tax netting and are included in Other non-current liabilities
on the Consolidated Balance Sheets at December 31, 2019 and 2018, respectively.

The valuation allowance decreased from $26.5 million at December 31, 2018 to $24.2 million at December 31, 2019. The
valuation allowance at December 31, 2019 was related to foreign net operating loss carryforwards, foreign tax credit carryforwards,
and certain foreign deferred tax assets. The Company intends to maintain these valuation allowances until sufficient evidence
exists to support their reversal.

At December 31, 2019, the Company had a net operating loss carryforward of $116.1 million related to its foreign tax filings.
Of the $116.1 million net operating loss carryforward, $76.9 million is subject to a valuation allowance. Depending on the tax
rules of the tax jurisdictions, the losses can be carried forward indefinitely or for periods ranging from five to twenty years. The
Company also has a foreign tax credit carryforward of $6.5 million subject to a valuation allowance of $6.5 million.

At December 31, 2018, the Company had a net operating loss carryforward of $118.0 million related to its foreign tax filings.
Of the $118.0 million net operating loss carryforward, $59.8 million is subject to a valuation allowance. Depending on the tax
rules of the tax jurisdictions, the losses can be carried forward indefinitely or for periods ranging from five to twenty years. The
Company also has a foreign tax credit carryforward of $8.2 million subject to a valuation allowance of $8.2 million.

As of December 31, 2018, the Company had $1.1 million of unrecognized tax benefits. As of December 31, 2019, the Company
had $0.1 million of unrecognized tax benefits of which, if recognized, would be recorded as a component of income tax expense.

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A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

Gross unrecognized tax benefits at January 1,
Gross increases for tax positions of prior years
Gross decreases for tax positions of prior years
Settlements
Lapse of statute of limitations
Gross unrecognized tax benefits at December 31,

2019
1,128
389
(377)
(1,010)
—
130

December 31,

2018

740
608
—
(220)
—
1,128

2017
1,038
167
—
(465)
—
740

In many cases the Company’s uncertain tax positions are related to tax years that remain subject to examination by the relevant
taxable authorities. Years 2016 through 2018 are subject to examination by the state taxing authorities. The years 2016 through
2018 are subject to examination by the federal taxing authority. There are certain foreign jurisdictions that are subject to examination
for years prior to 2016.

The Company is currently under audit by some jurisdictions. It is likely that the examination phase of several of these audits
will conclude in the next twelve months. No significant increases or decreases in unrecognized tax benefits are expected to occur
by December 31, 2020.

Estimated interest and penalties related to the underpayment of income taxes are classified as a component of the provision
for income taxes in the Consolidated Statements of Comprehensive Income (Loss). Accrued interest and penalties are less than
$0.1 million as of December 31, 2019.

The “Tax Cuts and Jobs Act” was enacted in December 22, 2017. The Tax Act included a territorial tax system, beginning
in 2018, and it included two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions
and the base-erosion and anti-abuse tax (“BEAT”) provisions.

The Global Intangible Low-Taxed Income ("GILTI") provisions require the Company to include in its U.S. income tax return
foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company became
subject to incremental U.S. tax on GILTI income beginning in 2018 due to expense allocations required by the U.S. foreign tax
credit rules. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided
any deferred tax impacts of GILTI in its consolidated financial statements for the year ended December 31, 2019.

The Base Erosion and Anti-Abuse Tax ("BEAT") provisions in the Tax Reform Act eliminates the deduction of certain base-
erosion payments made to related foreign corporations and impose a minimum tax if greater than regular tax. The Company does
not expect it will be subject to this tax and therefore has not included any tax impacts of BEAT in its consolidated financial
statements for the year ended December 31, 2019.

17. Changes in Accumulated Other Comprehensive Income

The changes in Accumulated other comprehensive income (“AOCI”) by component for the year ended December 31, 2019,

are summarized below:

Balance at December 31, 2018
Other comprehensive income before classification, net of tax
Balance at December 31, 2019

— $
13
13

5,258
844
6,102

(1,196) $
(1,095)
(2,291) $

4,062
(238)
3,824

Available-
for-
Sale
Securities

Foreign
Currency
Translation

Pension

AOCI

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18. Segment Information

In 2018, the Company completed the integration of its Leadership Consulting and Culture Shaping businesses into one
combined service offering, Heidrick Consulting. In conjunction with the integration, the Company reorganized its Management
Committee, which the Company considers to be its chief operating decision maker, so as to regularly assess performance and
make resource allocations decisions for the Heidrick Consulting business. Therefore, the Company now reports Leadership
Consulting and Culture Shaping as one operating segment, Heidrick Consulting. In conjunction with the change in operating
segments, the Company modified its corporate cost allocation methodology. Previously reported operating segment results for the
twelve months ended December 31, 2017, have been recast to conform to the new operating segment structure and corporate cost
allocation methodology.

The Company has four operating segments. The executive search business operates in the Americas, Europe (which includes

Africa) and Asia Pacific (which includes the Middle East), and the Heidrick Consulting business operates globally.

For segment purposes, reimbursements of out-of-pocket expenses classified as revenue and other operating income are reported
separately and, therefore, are not included in the results of each segment. The Company believes that analyzing trends in revenue
before reimbursements (net revenue), analyzing operating expenses as a percentage of net revenue, and analyzing operating income
(loss) more appropriately reflects its core operations.

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The revenue, operating income, depreciation and amortization, and capital expenditures, by segment, were as follows:

2019

December 31,

2018

2017

Revenue

Executive Search

Americas
Europe
Asia Pacific

Total Executive Search

Heidrick Consulting

Revenue before reimbursements
Reimbursements

Total revenue

Operating income (loss)

Executive Search
Americas (1)
Europe (2)
Asia Pacific (3)

Total Executive Search

Heidrick Consulting (4)

Total segments

Global Operations Support (5)

Total operating income (loss)

Depreciation and amortization

Executive Search
Americas
Europe
Asia Pacific

Total Executive Search

Heidrick Consulting

Total segments

Global Operations Support

Total depreciation and amortization

Capital expenditures
Executive Search
Americas
Europe
Asia Pacific

Total Executive Search

Heidrick Consulting

Total segments

Global Operations Support

Total capital expenditures

415,455
135,070
95,827
646,352
60,572
706,924
18,690
725,614

100,833
3,026
13,590
117,449
(18,499)
98,950
(35,439)
63,511

4,204
2,784
1,472
8,460
1,079
9,539
832
10,371

1,121
1,070
295
2,486
541
3,027
325
3,352

405,267
145,348
102,276
652,891
63,132
716,023
19,632
735,655

96,880
5,849
15,999
118,728
(13,619)
105,109
(36,252)
68,857

4,605
3,735
1,646
9,986
1,577
11,563
959
12,522

601
3,557
440
4,598
581
5,179
1,006
6,185

339,793
125,346
86,905
552,044
69,356
621,400
18,656
640,056

75,337
13
537
75,887
(62,368)
13,519
(40,042)
(26,523)

4,794
3,328
1,565
9,687
4,099
13,786
988
14,774

7,123
1,460
2,633
11,216
1,172
12,388
3,298
15,686

(1) Operating income for the Americas includes restructuring charges of $4.1 million in 2019 and $0.8 million in 2017.
(2) Operating income for Europe includes restructuring charges of $4.0 million in 2017.
(3) Operating income for Asia Pacific includes restructuring charges of $2.0 million in 2017.
(4) Operating loss for Heidrick Consulting includes impairment charges of $50.7 million and restructuring charges of $3.4 million in 2017.
(5) Operating loss for Global Operations Support includes restructuring charges of less than $0.1 million in 2019 and $5.5 million in 2017.

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Identifiable assets, and goodwill and other intangible assets, net, by segment, are as follows:

Current assets

Executive Search

Americas
Europe
Asia Pacific
Total Executive Search
Heidrick Consulting
Total segments

Global Operations Support

Total allocated current assets
Unallocated non-current assets
Goodwill and other intangible assets, net

Executive Search

Americas
Europe
Asia Pacific

Total Executive Search
Heidrick Consulting
Total goodwill and other intangible assets, net

Total assets

19. Guarantees

December 31,

2019

2018

286,818
96,230
78,967
462,015
30,628
492,643
1,839
494,482
220,925

93,054
26,893
8,819
128,766
—
128,766
844,173

255,889
85,355
74,169
415,413
34,174
449,587
1,280
450,867
125,454

88,462
27,010
8,836
124,308
—
124,308
700,629

The Company has utilized letters of credit to support certain obligations, primarily the payment of office lease obligations
and business license requirements for certain of its subsidiaries in Europe and Asia Pacific. The letters of credit were made to
secure the respective agreements and are for the terms of the agreements, which extend through 2030. For each letter of credit
issued, the Company would have to use cash to fulfill the obligation if the subsidiary defaults on a lease payment. The maximum
amount of undiscounted payments the Company would be required to make in the event of default on all outstanding letters of
credit was approximately $2.5 million as of December 31, 2019. The Company has not accrued for these arrangements as no event
of default exists or is expected to exist.

20. Commitments and Contingencies

Litigation

The Company has contingent liabilities from various pending claims and litigation matters arising in the ordinary course of
the Company’s business, some of which involve claims for damages that are substantial in amount. Some of these matters are
covered by insurance. Based upon information currently available, the Company believes the ultimate resolution of such claims
and litigation will not have a material adverse effect on its financial condition, results of operations or liquidity.

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PART II (continued)
PART II (continued)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
DISCLOSURE

The Audit and Finance Committee of the Board of Directors (the “Audit Committee”) of the Company conducted a competitive
The Audit and Finance Committee of the Board of Directors (the “Audit Committee”) of the Company conducted a competitive
process to select a firm to serve as the Company’s independent registered public accounting firm for the fiscal year ending
process to select a firm to serve as the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2018. The Audit Committee invited several firms to participate in this process.
December 31, 2018. The Audit Committee invited several firms to participate in this process.

As a result of this process, on June 13, 2018, the Audit Committee appointed RSM US LLP (“RSM”) as the Company’s
As a result of this process, on June 13, 2018, the Audit Committee appointed RSM US LLP (“RSM”) as the Company’s
independent registered public accounting firm for the fiscal year ended December 31, 2018. In conjunction with the selection of
independent registered public accounting firm for the fiscal year ended December 31, 2018. In conjunction with the selection of
RSM to serve as the Company’s independent registered public accounting firm, the Audit Committee dismissed KPMG LLP
RSM to serve as the Company’s independent registered public accounting firm, the Audit Committee dismissed KPMG LLP
(“KPMG”) from that role effective on June 13, 2018.
(“KPMG”) from that role effective on June 13, 2018.

KPMG’s audit reports on the consolidated financial statements of the Company as of and for the fiscal year ended December 31,
KPMG’s audit reports on the consolidated financial statements of the Company as of and for the fiscal year ended December 31,
2017, did not contain any adverse opinion or disclaimers of opinion and were not qualified or modified as to uncertainty, audit
2017, did not contain any adverse opinion or disclaimers of opinion and were not qualified or modified as to uncertainty, audit
scope or accounting principles.
scope or accounting principles.

During the fiscal year ended December 31, 2017, and the interim period through June 13, 2018, there were (i) no disagreements
During the fiscal year ended December 31, 2017, and the interim period through June 13, 2018, there were (i) no disagreements
between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing
between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG would have caused KPMG to make reference
scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG would have caused KPMG to make reference
to the subject matter of the disagreement in their reports on the Company’s consolidated financial statements for such years, and
to the subject matter of the disagreement in their reports on the Company’s consolidated financial statements for such years, and
(ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
(ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures as defined in Securities Exchange Act of 1934, as amended, (the
The Company maintains disclosure controls and procedures as defined in Securities Exchange Act of 1934, as amended, (the
“Exchange Act”) Rules 13a-15(e) and 15d-15(e), that are designed to ensure that information required to be disclosed in the
“Exchange Act”) Rules 13a-15(e) and 15d-15(e), that are designed to ensure that information required to be disclosed in the
Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time
Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission (the “SEC”) rules and forms, and that such information is accumulated
periods specified in the Securities and Exchange Commission (the “SEC”) rules and forms, and that such information is accumulated
and communicated to the Company’s management, including its principal executive officer and principal financial officer, as
and communicated to the Company’s management, including its principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure. Any system of controls and procedures, no matter how well
appropriate, to allow timely decisions regarding required disclosure. Any system of controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Management of the Company, with the participation of the principal executive officer and the principal financial officer,
Management of the Company, with the participation of the principal executive officer and the principal financial officer,
evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31,
evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31,
2019. Based on the evaluation, the Company’s principal executive officer and principal financial officer concluded that the
2019. Based on the evaluation, the Company’s principal executive officer and principal financial officer concluded that the
Company’s disclosure controls and procedures were effective as of December 31, 2019.
Company’s disclosure controls and procedures were effective as of December 31, 2019.

(b) Management’s report on internal control over financial reporting
(b) Management’s report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting is a process designed by,
Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting is a process designed by,
or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar
or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar
functions, and effected by the Company’s board of directors, management, and other personnel, to provide reasonable assurance
functions, and effected by the Company’s board of directors, management, and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles (U.S. GAAP) and includes those policies and procedures that:
U.S. generally accepted accounting principles (U.S. GAAP) and includes those policies and procedures that:

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions

of the assets of the Company;
of the assets of the Company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with
accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
authorizations of management and directors of the Company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition

of the Company’s assets that could have a material effect on the financial statements.
of the Company’s assets that could have a material effect on the financial statements.

65
65

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Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on
the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission 2013. Based on this evaluation, management concluded that the Company’s system of internal control over financial
reporting was effective as of December 31, 2019.

The Company’s independent registered public accounting firm, RSM LLP, has issued a report on the Company’s internal

control over financial reporting. The report on the audit of internal control over financial reporting appears in this Form 10-K.

Effective January 1, 2019, the Company adopted ASU No. 2016-02, Leases, and implemented changes to the relevant business
processes, and related control activities within them, in order to monitor and maintain appropriate controls over financial reporting.
There were no other changes in our internal control over financial reporting that occurred during the period covered by this Annual
Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information relating to our directors, executive officers and corporate governance will be included in the 2020 Proxy Statement

and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is included in our 2020 Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table sets forth additional information as of December 31, 2019, about shares of our common stock that may
be issued upon the vesting of restricted stock units and performance stock units and the exercise of options under our existing
equity compensation plans and arrangements, divided between plans approved by our stockholders and plans or arrangements not
submitted to the stockholders for approval. For a description of the types of securities that may be issued under our Second Amended
and Restated 2012 Heidrick & Struggles GlobalShare Program. See Note 14, Stock-Based Compensation.

Plan Category
Equity compensation plans approved by stockholders

Equity compensation plans not approved stockholders

Total equity compensation plans

(a)

Number of
securities
to be
issued upon
exercise of
outstanding
options

(b)

(c)

Weighted-
average
exercise
price of
outstanding
options

Number of securities
remaining available for
future issuance under
equity compensation
plans
(excluding securities
reflected in column (a))

778,547 (1) $
—

778,547

—

981,682

—

981,682

(1) Includes 598,988 restricted stock units and 179,559 performance stock units at their target levels and no options. The
performance stock units represent the maximum amount of shares to be awarded at target levels, and accordingly, may
overstate expected dilution.

The other information required by this Item is included in our 2020 Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is included in our 2020 Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is included in the discussion under the caption “Audit Fees” in our 2020 Proxy Statement

and is incorporated herein by reference.

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:

PART IV

Index to Consolidated Financial Statements:

See Consolidated Financial Statements included as part of this Form 10-K beginning on page 32.

2. Exhibits:

Exhibit
No.

3.01

3.02

4.01

*4.02

10.01

10.02

10.03

10.04

10.05

10.06

10.07

10.08

10.09

10.10

10.11

10.12

10.13

Description

Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.02
of this Registrant’s Registration Statement on Form S-4 (File No. 333-61023))

Amended and Restated By-laws of the Registrant (Incorporated by reference to Exhibit 3.03 of the Registrant's
Form 8-K filed May 30, 2017)

Specimen Stock Certificate (Incorporated by reference to Exhibit 4.01 of this Registrant’s Registration Statement
on Form S-4 (File No. 333-61023)

Description of Securities

Credit Agreement dated as of June 22, 2011, among Heidrick & Struggles International, Inc., certain foreign
subsidiary borrowers thereto, the lenders party thereto, JPMorgan Chase Bank, as Administrative Agent and
Bank of America, N.A., as Syndication Agent (Incorporated by reference to Exhibit 10.1 of the Registrant’s
Form 8-K, dated June 22, 2011, filed on June 27, 2011)

Amendment and Restatement Agreement among Heidrick & Struggles International, Inc., certain foreign
subsidiary borrowers thereto, the lenders party thereto and JPMorgan Chase Bank, as Administrative Agent,
dated January 31, 2013 (Incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K, dated January 31,
2013)

Second Amended and Restated Credit Agreement among Heidrick & Struggles International, Inc., the Foreign
Subsidiary Borrowers from time to time party thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A.,
as Administrative Agent, and Bank of America, N.A., as Syndication Agent, dated June 30, 2015 (Incorporated
by reference to Exhibit 10.1 of Registrant’s Form 8-K, dated July 1, 2015)

Eighth Lease Amendment between 233 S. WACKER LLC and Heidrick & Struggles International, Inc. dated
October 1, 2014 (Incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed on October 9,
2014)

Lease between 1114 6th Avenue Co., LLC and Heidrick & Struggles International, Inc., and Heidrick &
Struggles, Inc., dated August 31, 2007 (Incorporated by reference to Exhibit 10.04 of the Registrant’s Form 10-K
filed on February 28, 2008)

Employment Agreement of Richard W. Pehlke dated August 15, 2011 (Incorporated by reference to Exhibit 10.1
of the Registrant’s Form 8-K, dated August 15, 2011, filed August 16, 2011) **

Amended and Restated Employment Letter Agreement of Stephen Beard dated May 18, 2011 (Incorporated by
reference to Exhibit 10.2 of the Registrant’s Form 10-Q filed on August 1, 2011)**

Employment Agreement of Tracy R. Wolstencroft dated February 2, 2014 (Incorporated by reference to exhibit
99.1 of the Registrant’s Form 8-K filed February 6, 2014)**

Employment Agreement of Richard W. Greene (Incorporated by reference to Exhibit 99.01 of the Registrant’s
Form 8-K filed March 27, 2015) **

Employment Agreement of Krishnan Rajagopalan dated April 9, 2015 (Incorporated by reference to Exhibit 99.1
of the Registrant’s Form 8-K filed April 20, 2015) **

Restricted Stock Unit Participation Agreement issued to Tracy R. Wolstencroft dated February 3, 2014
(Incorporated by reference to exhibit 99.2 of the Registrant’s Form 8-K filed February 6, 2014)**

Performance Stock Unit Participation Agreement issued to Tracy R. Wolstencroft dated February 3, 2014
(Incorporated by reference to exhibit 99.3 of the Registrant’s Form 8-K filed February 6, 2014)**

Employment Agreement of Colin Price dated January 18, 2017 (Incorporated by reference to Exhibit 99.1 of the
Registrant’s Form 8-K filed January 19, 2017.)**

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10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

Membership Interest Purchase Agreement, dated as of December 31, 2012, among Heidrick & Struggles
International, Inc., Senn-Delaney Leadership Consulting Group, LLC and the members of Senn-Delaney
Leadership Consulting Group, LLC (Incorporated by reference to exhibit 2.1 of the Registrant’s Form 8-K filed
January 4, 2013).

Share Purchase Agreement, dated October 1, 2015, by and among Heidrick & Struggles International, Inc. and
Heidrick & Struggles (UK) Limited and Sharon Lee Toye, Tammy Ann Mitchell-Fisher, Catherine Elizabeth
Powell and Colin Price (Incorporated by reference to exhibit 2.1 of the Registrant’s Form 8-K filed October 6,
2015).

Asset Purchase Agreement, dated as of February 9, 2016, by and among Decision Strategies International, Inc.,
Decision Strategies International (UK) Limited, The Shareholders set forth on Annex I thereto, Paul J. H.
Schoemaker, as the Shareholders' Representative, Heidrick & Struggles, Inc., Hedirick & Struggles Leadership
Consulting Ltd. and Heidrick & Struggles International, Inc. (Incorporated by reference to exhibit 2.1 of the
Registrant’s Form 8-K filed February 11, 2016).

Heidrick & Struggles International, Inc. Management Severance Pay Plan and Summary Plan Description as
Amended and Restated Effective December 31, 2010 (Incorporated by reference to Exhibit 10.1 of the
Registrant’s Form 8-K dated, October 25, 2011, filed on October 25, 2011) **

2007 Heidrick & Struggles GlobalShare Program (Incorporated by reference to Appendix A to the Registrant’s
Proxy Statement dated April 25, 2011)**

Heidrick & Struggles Incentive Plan, as Amended and Restated Effective January 1, 2008 (Incorporated by
reference to Exhibit 10.20 of the Registrant’s From 10-K filed on February 27, 2009)**

Form of Non-Qualified Stock Option Grant Agreement (Incorporated by reference to Exhibit 10.5 of the
Registrant’s Form 8-K dated December 29, 2011, filed on January 5, 2012)**

Form of Restricted Stock Unit Participation Agreement (Incorporated by reference to Exhibit 10.3 of the
Registrant’s Form 8-K dated December 29, 2011, filed on January 5, 2012)**

Form of Performance Stock Unit Participation Agreement (Incorporated by reference to Exhibit 10.4 of the
Registrant’s Form 8-K dated December 29, 2011, filed on January 5, 2012)**

Form of Non-Employee Director Restricted Stock Unit Participation Agreement (Incorporated by reference to
Exhibit 10.19 of the Registrant’s 10-K dated March 14, 2012)**

Heidrick & Struggles International, Inc. U.S. Employees Deferred Compensation Plan (Incorporated by
reference to Exhibit 10.10 of the Registrant’s Form 10-K for the year ended December 31, 2005, filed on
March 10, 2006)**

Heidrick & Struggles International, Inc. Deferred Compensation Plan (Incorporated by reference to Exhibit 4.1
of this Registrant’s Registration Statement on Form S-8 (File No. 333-82424))**

First Amendment to the Heidrick & Struggles International, Inc. U.S. Employees Deferred Compensation Plan
(Incorporated by reference to Exhibit 10.25 of the Registrant’s Form 10-K for the year ended December 31,
2008, filed on February 27, 2009)**

Heidrick & Struggles Non-Employee Directors’ Voluntary Deferred Compensation Plan - Amended and Restated
as of September 30, 2016 (Incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K filed October 5,
2016.)**

Heidrick & Struggles International, Inc. Change in Control Severance Plan, as amended and restated effective
December 29, 2011 (Incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K dated December 29,
2011, filed on January 5, 2012).**

Share Purchase Agreement, dated August 4, 2016 for the sale and purchase of the entire issued share capital of
JCA Group Limited and the entire partnership interest in JCA Partners LLP by and among JCA Events Limited,
the persons listed in Schedule 1 thereto, Heidrick & Struggles (UK) Limited, and Heidrick & Struggles
International, Inc. (Incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K filed August 4, 2016.)

Asset Purchase Agreement by and among Philosophy IB, LLP, Christine H. Lotze, Kaveh Naficy and Heidrick &
Struggles, Inc. dated August 12, 2016 (Incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K
filed August 16, 2016.)

Deed of Amendment dated August 25, 2016 by and among Heidrick & Struggles International, Inc., Heidrick &
Struggles (UK) Limited, and Sharon Lee Toye, Tammy Ann Mitchell-Fisher, Catherine Elizabeth Powell and
Colin Price (Incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K filed August 29, 2016.)

Business Protection Agreement by and between Heidrick & Struggles (UK) Limited and Mr. Colin Price dated
January 18, 2016 (Incorporated by reference to Exhibit 99.2 of the Registrant’s Form 8-K filed January 18,
2017.)**

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10.33

10.34

10.35

10.36

10.37

10.38

10.39

10.40

10.41

10.42

10.43

10.44

10.45

10.46

10.47

10.48

10.49

10.50

10.51

10.52

Amended and Restated 2012 Heidrick & Struggles GlobalShare Plan (Incorporated by reference to Appendix B
to the Registrant’s Proxy Statement dated April 18, 2014)**

Earn Out Buyout Agreement between Tammy Ann Mitchell-Fisher, Catherine Elizabeth Powell, Colin Price,
Sharon Lee Toye, Heidrick & Struggles (UK) Limited, and Heidrick & Struggles International, Inc. dated June
14, 2017 (Incorporated by reference to Exhibit 2.1 of the Registrant's Form 8-K filed June 20, 2017)

Employment Agreement of Krishnan Rajagopalan dated September 21, 2017 (Incorporated by reference to
Exhibit 99.1 of the Registrant's Form 8-K filed September 21, 2017)**

Agreement Regarding Equity Awards of Tracy R. Wolstencroft dated September 21, 2017 (Incorporate by
reference to Exhibit 99.2 of the Registrant's Form 8-K filed September 21, 2017)

Share Purchase Agreement, dated September 19, 2017 between Porma APS and Heidrick & Struggles, Inc.
(Incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K filed September 28, 2017)

Memorandum of Clarification relating to the Share Purchase Agreement among Hedirick & Struggles
International, Inc., Heidrick & Struggles (UK) Limited, JCA Events Limited, and the persons listed on Schedule
1 thereto made on August 4, 2016 (Incorporated by reference to Exhibit 2.1 of the Registrant's Form 8-K filed
November 15, 2017)

Separation Agreement by and between Heidrick & Struggles International, Inc. and Stephen W. Beard dated
January 4, 2018 (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed January 5, 2018)

Separation Agreement by and between Heidrick & Struggles International, Inc. and Michael Marino dated
December 31, 2017 (Incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed January 5,
2018)

Employment Agreement between Heidrick & Struggles International, Inc. and Kamau Coar dated January 4,
2018 (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed January 10, 2018)**

Employment Agreement between Heidrick & Struggles International, Inc. Andrew LeSueur dated January 9,
2018 (Incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed January 10, 2018)**

Heidrick & Struggles International, Inc. Management Severance Pay Plan as amended and restated effective
December 31, 2017 (Incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed January 10,
2018)

Employment Agreement between Heidrick & Struggles International, Inc. and Mark Harris dated March 19,
2018 (Incorporated by reference to Exhibit 99.1 of the Registrant's Form 8-K filed March 21, 2018)**

Letter of KPMG LLP dated June 15, 2018 to the SEC (Incorporated by reference to Exhibit 16.1 of the
Registrant's Form 8-K filed June 15, 2018)

Second Amended and Restated 2012 Heidrick & Struggles GlobalShare Program (Incorporated by reference to
Annex A in the Registrant's Schedule 14A filed May 11, 2018)

Credit Agreement dated as of October 26, 2018 among Heidrick & Struggles International, Inc., the foreign
subsidiary borrowers hereto, the lenders party thereto, Bank of America, N.A., as Administrative Agent,
SunTrust Bank, as Syndication Agent and HSBC Bank USA, national Association, as Documentation Agent
(Incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed October 29, 2018)

Form of Phantom Stock Unit Participation Agreement (Incorporated by reference to Exhibit 10.1 of Registrant's
Form 10-Q filed October 29, 2018)**

Form of Restricted Stock Unit Participation Agreement (Incorporated by reference to Exhibit 10.1 of Registrant's
Form 10-Q filed October 29, 2018)**

Employment Agreement between Heidrick & Struggles International, Inc. and Sarah Payne dated December 5,
2018 (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed December 6, 2018)**

Employment Agreement between Heidrick & Struggles International, Inc. and Michael Cullen dated February 6,
2019 (Incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed February 8, 2019)**

Form of Performance Stock Unit Participation Agreement (Incorporated by reference to Exhibit 10.1 of
Registrant's Form 10-Q filed July 29, 2019)**

*10.53

*21.01

*23.01

Form of Performance Stock Unit Participation Agreement**

Subsidiaries of the Registrant

Consent of Independent Registered Public Accounting Firm - RSM LLP

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*23.02

*31.1

*31.2

*32.1

*32.2

Consent of Independent Registered Public Accounting Firm - KPMG LLP

Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

*101.INS XBRL Instance document

*101.SCH XBRL Taxonomy Extension Schema Document

*101.CAL XBRL Taxonomy Calculation Linkbase Document

*101.DEF XBRL Taxonomy Extension Definition Linkbase Document

*101.LAB XBRL Taxonomy Extension Label Linkbase Document

*101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

Denotes a management contract or compensatory plan or arrangement.

(b) SEE EXHIBIT INDEX ABOVE

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 24, 2020.

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

By:

Title:

/s/ Stephen A. Bondi

Stephen A. Bondi

Vice President, Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities indicated on February 24, 2020.

Signature

Title

/s/ Krishnan Rajagopalan

Krishnan Rajagopalan
(Principal Executive Officer)

/s/ Mark R. Harris
Mark R. Harris
(Principal Financial Officer)

/s/ Stephen A. Bondi

Stephen A. Bondi
(Principal Accounting Officer)

/s/ Elizabeth L. Axelrod

Elizabeth L. Axelrod

/s/ Clare M. Chapman

Clare M. Chapman

/s/ Gary E. Knell
Gary E. Knell

/s/ Lyle Logan

Lyle Logan

/s/ T. Willem Mesdag
T. Willem Mesdag

/s/ Stacey Rauch

Stacey Rauch

/s/ Adam Warby

Adam Warby

Chief Executive Officer & Director

Executive Vice President, Chief Financial Officer

Vice President, Controller

Director

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EXECUTIVE OFFICERS

BOARD OF DIRECTORS

Krishnan Rajagopalan
President and
Chief Executive Offi cer

Kamau Coar
General Counsel and
Corporate Secretary

Michael M. Cullen
Chief Operating Offi cer

Mark R. Harris
Chief Financial Offi cer

Sarah Payne
Chief Human Resources Offi cer

Elizabeth L. Axelrod *(3)
Vice President,
Employee Experience,
Airbnb, Inc.

Laszlo Bock *
Co-Founder and Chief Executive
Offi cer, Humu, Inc.

Clare M. Chapman *(2) (3+)
Former Group People Director,
BT Group

Gary E. Knell *(2+) (3)
Chairman,
National Geographic Partners

Lyle Logan *(1) (2)
Executive Vice President
and Managing Director,
Global Financial Institutions Group,
Northern Trust Company

T. Willem Mesdag *(1+) (3)
Founder and Managing Partner,
Red Mountain Capital Partners

Krishnan Rajagopalan **
President and
Chief Executive Offi cer,
Heidrick & Struggles

Stacey Rauch *(1)
Director (Senior Partner) Emeritus,
McKinsey & Company

Adam H. Warby * **
Chairman of the Board,
Heidrick & Struggles

* Independent Director
** Ex Offi cio member of all Board committees
(1) Member, Audit and Finance Committee
(2) Member, Nominating and Board
Governance Committee
(3) Member, Human Resources and
Compensation Committee
+ denotes committee chair

Annual Meeting
The annual meeting of stockholders
will be held on Thursday, May 28, 2020
8:00 a.m., CDT. You may access
the meeting by visiting www.
virtualshareholdermeeting.com/HSII2020.
virtualshareholdermeeting.com/HSII2020

Stock Transfer Agent and Registrar
For address changes, account
consolidation, registration changes,
stock holdings and lost stock certiﬁ cates,
please contact:
Computershare / BNY Mellon
Shareholder Services
480 Washington Boulevard
Jersey City, NJ 07310–1900
(866) 892-5631

Shareholders can also obtain account
information through Investor Service Direct
at: www.bnymellon.com/shareowner/isd

Independent Registered Public
Accounting Firm
RSM US LLP, Chicago, Illinois

Exchange Listing
Our common stock has been listed on the
Nasdaq Global Select Market under the
Symbol HSII since our initial public off ering
in April 1999.

SEC Filings & Investor Contact Information
Filings with the Securities and Exchange
Commission and other investor information
are available through our website at
www.heidrick.com, or by request to the
Investor Relations Department by mail at
our corporate headquarters address, by
email at investorrelations@heidrick.com
or by telephone at (212) 551-0554.

Corporate Governance
Visit the Who We Are section of our
website at www.heidrick.com to see
our corporate governance documents,
including the Code of Business Conduct &
Ethics, Corporate Governance Guidelines,
Director Independence Standards, Policy
on Resolution of Conﬂ icts of Interest for
Directors and Executive Offi cers, Clawback
Policy, Insider Trading Policy, Amended
and Restated By-laws, and Charters
of our Audit & Finance Committee,
Nominating and Board Governance
Committee and Human Resources and
Compensation Committee.

Heidrick & Struggles™ and We Help Our
Clients Change The World One Leadership
Team at a Time™ are registered trademarks
of Heidrick & Struggles International, Inc.

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Some statements in the Letter to Shareholders may be forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Actual outcomes and
results may diff er materially from what is expressed, forecasted or implied in the forward-looking statements. For more information on the factors that could aff ect the outcome
of forward-looking statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2019, under Risk Factors in Item 1A and our quarterly ﬁ lings with the
SEC. We caution the reader that the list of factors may not be exhaustive. We undertake no obligation to update publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.

Heidrick & Struggles International, Inc.
233 South Wacker Drive, Suite 4900
Chicago, IL 60606
312 469 1200 www.heidrick.com

WE HELP OUR CLIENTS
CHANGE THE WORLD,
ONE LEADERSHIP TEAM
AT A TIME.™
AT A TIME.™
AT A TIME.

Our Worldwide Locations

AMERICAS
—
Atlanta
Boston
Calgary
Chicago
Costa Mesa
Dallas
Florham Park
Houston
Los Angeles
Mexico City
Miami
Minneapolis
New York
Philadelphia
Rio de Janeiro
San Francisco
São Paulo
Stamford
Toronto
Washington, D.C.

EUROPE
—
Amsterdam
Bremen
Brussels
Copenhagen
Dublin
Düsseldorf
Frankfurt
Helsinki
Istanbul
Lisbon
London
Madrid
Milan
Moscow
Munich
Paris
Stockholm
Warsaw
Zürich

AFRICA / MIDDLE EAST
—
Johannesburg
Dubai

ASIA PACIFIC
—
Bangalore
Bangkok
Beijing
Hong Kong
Melbourne
Mumbai
New Delhi
Perth
Seoul
Shanghai
Singapore
Sydney
Tokyo